Iraq, Algeria support extension of oil production cuts

On the New York Mercantile Exchange, crude futures for June delivery climbed 0.49% to settle at $47.56 a barrel, while on London's Intercontinental Exchange, Brent added 0.44% to end at $50.44 a barrel.

USA crude production has risen by over 10 percent since mid-2016 to 9.3 million bpd, close to the output of top producers Russian Federation and Saudi Arabia.

"If U.S. output continues to level off, supplies continue to decline, and OPEC can agree to, at the very least, extend their quota policy into [the second half of the year], that will be supportive of prices establishing a near-term bottom".

In fact, the OPEC and non-OPEC countries managed to cut the daily production by 1.4 million barrels per day, but the exports fell by roughly 1 million barrels a day.


The drop was evidence to some that demand is robust in the U.S. Others took it as proof that the move by OPEC and other big oil produces to cut global crude supply is working.

In its monthly oil market report (MOMR), OPEC said the U.S. oil and gas companies have already stepped up activities in 2017 as they start to increase their spending amid a recovery in oil prices.

Brent crude futures, the worldwide benchmark for oil prices, were at $49.37 per barrel at 0252 GMT on Tuesday, down from a high of $49.60 earlier in the day and near their last close.

The US Energy Information Administration said US crude inventories fell by 5.2 million barrels last week, which was more than the 1.8 million-barrel slide analysts predicted. While oil prices have gained support, higher rival supply is limiting further gains and an inventory glut has proved slow to shift. Equatorial Guinea, which is Africa's third largest oil producer, said it had support from Saudi Arabia to join OPEC.


"It is hard to see how the day's gains last".

When OPEC introduced its 2017 forecast for non-OPEC supply last July, it had projected a contraction of 100,000 barrels a day. Libya's crude production has risen to 800,000 barrels a day as fields restart, the most since 2014.

Russian Federation has made a commitment to cut its crude production by 300,000 barrels per day starting January 1, 2017 versus October 2016, or 2.7%, as part of the oil output cap deal with OPEC. Saudi Aramco will reduce supplies to Asian customers by about 7 million barrels in June. OPEC economists, meanwhile, said in their monthly market report for May that balance was apparent.

The latest rally began last September amid discussions between some OPEC and non-OPEC producers to cut production.


The oil producers will meet on May 25 in Vienna to discuss possibility of extension.


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