OPEC, non-OPEC producers committed to restoring market stability - Barkindo

Owen Stevens
April 21, 2017

There is a strong probability that U.S. production will increase again and a sharp draw in inventories will be needed to boost overall sentiment.

Overall, WTI edged higher to the $52.50 p/b area ahead of the USA open with Brent trading back just above the $55.00 level. The American Petroleum Institute late Tuesday reported a decline of 840,000 barrels, while analysts polled by S&P Global Platts forecast a fall of 50,000 barrels.

May output was expected to rise by 123 000 barrels per day to 5,19-million barrels per day, according to the US Energy Information Administration's drilling productivity report.

Based on China's National Bureau of Statistics, the country's March gasoline output surge 2.5 percent on a year over year basis to 11.24 million tonnes, marking its all-time high since April 2014.

Oil had rallied above $53/bbl after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging cuts past June, but rising US output is undermining the effort to trim a global glut.

While OPEC countries still made up most (57%) of China's 7.6 million barrels per day (b/d) of crude oil imports in 2016, crude oil from non-OPEC countries made up 65% of the growth in China's imports between 2012 and 2016. Output in the lower-48 states rose 21,000 barrels a day to 8.72 million, also the highest since August 2015. "There was also a large jump in refinery capacity utilization ahead of the peak summer driving season".

USA crude imports rose last week by 56,000 barrels per day.

Much depends on the upcoming OPEC policy meeting on May 25, at which time a decision is expected on a possible six-month extension to the production-freeze agreement depending on the cooperation of non-OPEC producers (such as Russia).

The oil price got an early lift from comments by the secretary-general of the Organization of the Petroleum Exporting Countries, who said the group was committed to restoring market stability by bringing global inventories down to the industry's five-year average. They settled down 53 cents at $52.65 a barrel.

Increasing U.S. output is undermining attempts by OPEC and other major oil producers to curb output and sustain higher prices on oil market.

Opec's compliance with the cuts improved to 104 per cent in March from 90 per cent in February, while the rate for non-Opec producers in the deal increased to 64 per cent from 38 per cent over the same two months, the International Energy Agency said in an April 13 report.

Other reports by VgToday

Discuss This Article