OPEC panel looking at deepening, extending oil cuts

OPEC panel looking at deepening, extending oil cuts

But the USA crude drawdown was smaller than expected and the oil market remained extremely well supplied, analysts said.

NEW YORK, May 19 (Reuters) - Oil prices rose more than a dollar a barrel on Friday, heading for a second week of gains on growing expectations that leading oil producers will agree at next week's OPEC-led meeting to extend output cuts aimed at reducing a global crude glut. The main risk is that OPEC fails to renew the deal and increases output just as the supplies resulting from short-cycle (primarily shale) investment in the USA begin to accelerate.

Crude oil production in Nigeria rose by 274,000 barrels per day in April, the Organisation of Petroleum Exporting Countries (OPEC) has said.

To rebalance the market and to help the prices surge again, the Organization of the Petroleum Exporting Countries (OPEC) made a decision to cut the oil production for the first time in eight years. USA benchmark crude was up 61 United States cents at US$49.96 a barrel. An extension is due to be discussed at an OPEC meeting on May 25.

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"The numbers beneath the surface were rather mixed with gasoline stocks falling only slightly on weaker demand and sharply higher imports suggesting sufficient availability of crude oil internationally despite OPEC cuts", said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany, as reported by Reuters.

But the International Energy Agency said Tuesday that just extending the cuts wouldn't be enough to bring markets in balance. The U.S. benchmark for oil is competitive against Dubai crude oil, which had a $2.20 per barrel premium on WTI in early Thursday trading, and drawing the interest from Asian buyers. The members are going to discuss whether to extend output cuts agreed in December previous year between OPEC and 11 non-member countries, including Russian Federation.

It seems that the Organization of Petroleum Exporting Countries (OPEC) may be losing control of oil prices worldwide.

The cost to drill for shale has fallen by more than one-third in the last two years, analysts said. Market watchers expect the group to extend cuts until the end of March 2018. Sandy Fielden, the director of research, commodities and energy at Morningstar, told UPI the perception in Asia is that OPEC crude oil is scarce because of the managed decline agreement. But U.S. oil producers are not paying any attention to the plea, and the number of rigs has more than doubled over the past year. Iran was not subject to the stringent production cuts of other large Opec producers when the first agreement was signed on 30 November 2016.