22 April, 2017
United States commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 2.2 million barrels from the previous week, the Energy Information Administration (EIA) said in its Weekly Petroleum Status Report.
The estimates followed data from the U.S. Energy Information Agency Tuesday, which said American producers would likely increased their 2018 output by around 7.37% to 9.9 million barrels per day.
The report also showed that gasoline inventories decreased by 2.973 million barrels, compared to expectations for a draw of 1.721 million barrels, while distillate stockpiles fell by 2.153 million barrels, compared to forecasts for a decline of 0.885 million.
The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017.
US West Texas Intermediate (WTI) crude futures gained 18 cents to be traded at $53.58 a barrel, which is also their highest price level since early March.
OPEC and other producers, including Russian Federation, have pledged to cut output by around 1.8 million barrels per day (bpd) during the first half of 2017 to rein in oversupply.
OPEC countries cut oil output in March by more than they pledged, according to figures the group published in a monthly report, as it sticks to an effort to clear a supply glut that has weighed on prices.
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The group's leader, Saudi Arabia, was said to have produced 9.9 million bpd in March, more than 100,000 bpd below its monthly quota assigned under the production cut deal.
The market, which retreated early in USA trading, turned positive after reports that Saudi Arabia said it wants to extend production cuts enacted in January for another six months when the group meets in May, according to the Wall Street Journal. Saudi Arabia, Kuwait and most other OPEC members are leaning toward this if agreement is reached with other producers, OPEC sources told Reuters last month.
The price of oil LCOc1 has doubled to around $56 a barrel from a 13-year low of $27 hit in January last year, which has encouraged a raft of new supply.
"OPEC just has to have patience because the markets are rebalancing", Abhishek Deshpande, chief energy analyst at Natixis SA in London, said in a Bloomberg television interview.
In 2016, the United States was the world's largest net exporter of refined products, with a significant portion of crude oil input to USA refiners supporting those exports. USA production, however, continued to increase with a 0.4% gain on the week to 9.24 million bpd.
"The weakness in the market is concerning, seeing that US production alone can offset a number of encouraging news", said Michael McCarthy, a chief strategist at CMC Markets.
OPEC is scheduled to meet on May 25 to discuss whether to extend output cuts of 1.2 million barrels per day for another six months.