Both the oil benchmarks previously witnessed a steep rise in prices after Saudi Arabia and Russian Federation agreed to extend the ongoing supply cuts until the end of March 2018. But by May 17, July contracts for Brent crude were trading at $51.55.
Market watchers are growing more confident that the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation will extend output cuts of nearly 1.8 million barrels per day (bpd) until the end of March 2018.
Rebalancing the global oil glut is going to take more than a temporary pullback by the world's largest producers because USA unconventional production is overwhelming any shortfall and coming back faster than anticipated, the International Energy Agency said.
WTI light sweet crude oil was up 66 cents at USD50 a barrel, the highest since April.
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The latest Oil Market Report (OMR) issued on Tuesday, comes about one week before the scheduled ministerial meeting on May 25 by the Organization of the Petroleum Exporting Countries (OPEC), the global energy watchdog noted.
On Monday, Saudi Arabia and Russian Federation pledged to continue cutting supplies to prop up prices and stabilize the market. USA light crude slid 26c to $48.40. Less supportive of prices is United States crude production reaching 9.3 mbd in the latest weekly assessment, a cumulative increase of 544kbd since the end of 2016.
Even as inventories are drawing down, US crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day, close to levels from top producers Russian Federation and Saudi Arabia. That could slow the supply drawdown. Right now, production in the state is down 14% compared to previous year.
USA crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day, close to levels from top producers Russian Federation and Saudi Arabia. Off-topic, inappropriate or insulting comments will be removed.