Oil near flat in strong week for crude

Owen Stevens
April 22, 2017

The latest US oil production and inventory data will be published later on Wednesday by the Energy Information Administration (EIA).

USA crude supplies fell by 1.3 million barrels last week, the American Petroleum Institute was said to report.

OPEC members pumped a combined 31.93 million barrels of crude daily last month, down 153,000 bpd from February, the group said in the latest edition of its Monthly Oil Market Report.

Brent crude futures were down 17 cents at $56.06 a barrel by 10:43 a.m. EDT (1543 GMT), having touched a one-month high of $56.65.

OPEC members and other oil producers have made a decision to cut their production by 1.8 million barrels a day for the first six months of 2017, which is scheduled to end in June. Production will likely grow by 300,000 a barrels a day this year and another 700,000 barrels a day in 2018, to an average of 9.9 million barrels a day. "It does appear that there is bit of focus on the data that came alongside inventory numbers which showed further increase in USA production".

OPEC meets on May 25 to consider whether to extend the supply cut beyond June. Stockpiles probably dropped from a record high by 1.5 million barrels to 534 million barrels in the week ended April 7, according to a Bloomberg survey before an Energy Information Administration report Wednesday.

"I wouldn't be surprised to see a bit of book squaring going on now, ahead of the USA inventory data which is due on Thursday morning Asia time", he said, also noting that current prices have attracted shale oil producers in the past.

Russian Federation is the largest non-member contributor to an arrangement by the Organization of Petroleum Exporting Countries (OPEC) to balance the global market for oil through production cuts. OPEC members have previously said they lean toward oil cut extensions, so long as non-members are also involved.

The EIA revised its forecast for US oil production up by around 2 percent for 2018, and it increased its projection for the fourth quarter of 2017 up about 1 percent.

Meanwhile, Kuwait oil chief Essam al-Marzouq fuelled expectations that OPEC would reveal further cuts in March compared to previous months, after he said he expected producers' level of compliance with the deal to cut global supply would "be higher than the previous couple of months". Imports from Mexico have declined as Mexico's crude oil production, its total crude export sales, and the share of its exports sold in the United States have all fallen. In its monthly report on Wednesday, OPEC also boosted estimates for rival supplies as shale drillers emerge from the industry's two-year slump.

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