Finance

Oil Inventories Fall More than Expected; Prices Rise

Oil Inventories Fall More than Expected; Prices Rise

Oil prices rise in Asia in expectation of Aramco supply cut TOKYO: Oil futures rose in Asian trading on Wednesday after Reuters reported Saudi Arabia would cut supplies to the region as OPEC battles against rising US output that is threatening to derail its attempts to end a sustained global glut in crude.

U.S. crude oil production seems to be derailing the efforts made by the Opec countries as it has risen to 9.293 million barrels per day (mbd) in April 2017, the highest level since August 2015 and up 10 per cent (0.865 mbd) from July 2016's low of 8.428 mbd.

OPEC countries and other producers including Russian Federation have pledged to cut output by nearly 1.8 million barrels per day (bpd) during the first half of this year to prop up the market.

Speaking at the Platts Crude Oil Summit in London on Wednesday, Neil Atkinson, head of oil analysis at the International Energy Agency, said the current agreement by more than 20 major oil producers has succeeded in making a dent in the global supply glut that has kept prices under pressure in recent years.

US West Texas Intermediate (WTI) crude futures were at $47.57 a barrel, up 24c, or 0.5% from the last settlement.

While US oil inventories fell, the country's crude oil production continued to rise, jumping above 9.3-million barrels a day last week, in what is now a more than 10% increase since its mid-2016 trough.

Oil prices fell, rattled by concern over slowing demand, a rising U.S. dollar and increasing USA crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.

The American Petroleum Institute (API) reported a drawdown of 5.789 million barrels of crude oil, for the week ending May 5, which beat analyst expectations of a fall of 1.8 million barrels.

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Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June.

A pick up in United States oil production has contributed to the imbalance in the market but there were signs last week that American crude inventories had fallen.

Global benchmark Brent crude LCOc1 settled up $1.49 a barrel, or 3 percent, to $50.22 a barrel.

Non-cartel producers led by Russian Federation partially matched the cuts.

Since a low point in May 2016, US producers have added 387 oil rigs, or about 123 per cent, Goldman Sachs said.

Asia will also account for almost two-thirds of global gas demand, by that time he said.

Libya and Nigeria are two OPEC members exempt from the production declines so they can lean on oil revenue to help ensure national security.

Crude oil prices edged lower early Tuesday with bearish sentiments becoming entrenched as trends outside an OPEC-led balance effort add to supply-side concerns.


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