Published: Thu, May 11, 2017
Money | By Armando Alvarado

Oil prices rise in Asia in expectation of Aramco supply cut

U.S. West Texas Intermediate (WTI) crude CLc1 was up 23 cents, or 0.5 percent, at $46.11 a barrel.

Prices surged after the Organization of the Petroleum Exporting Countries agreed in November with some other producing countries to curb supply.

Notably, U.S. crude production continued to climb, rising to 9.31 million bbl/d, from 9.29 million bbl/d the week earlier.

Saudi Arabia and Russian Federation signaled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes.

Possibly also helping sentiment in trading on Wednesday is a Reuters' report that Saudi Arabia, which has taken on the lion share of the cuts, is planning to reduce oil exports to Asia by about 7 million barrels in June.

Also supporting prices were comments from Algeria's energy minister on Wednesday that Algeria and Iraq favour extending global supply cuts when Opec meets later this month.

USA inventories fell by 5.25 million barrels during the week ended May 5.

A survey of industry sentiment from S&P Global Platts predicted a draw on USA crude oil inventories of 1.8 million barrels and a gasoline stock decline of 700,000 barrels.

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OPEC's efforts to tighten the market and prop up prices have been undermined by a relentless rise in USA production, especially from shale oil drillers. Many are now pushing back the expected timing for when the oil market will come into balance after prices began slumping almost three years ago.

The post Oil prices rise on expectations of output cut extension appeared first on Vanguard News.

Crude oil prices were in modest decline before the start of USA trading.

"Russia is in solidarity with the efforts of our partners to rebalance the market and considers that the joint initiative to stabilise the world oil market is now effective", energy minister Alexander Novak said, Russian news agencies reported.

The markets are slowly coming to terms that the OPEC is not the force it used to be in deciding prices.

Saudi Energy Minister, Khalid al-Falih, said on Monday that the OPEC-led production cut could be extended beyond 2017. "We expect the inventory situation to right itself, but that's been a very slow process so far".

"Oil demand growth this year is underwhelming, in part explaining why crude oil prices and refining margins have sold off sharply recently", it said.

Libyan oil production has risen to just below 800,000 bpd - its highest since 2014 - as the OPEC member pushes up production from the newly restarted Sharara and El Feel fields, a Libyan oil source told Reuters.

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