Oil inches higher as Opec cut support grows

Oil inches higher as Opec cut support grows

Oil inches higher as Opec cut support grows

Oil Minister Bijan Namdar Zanganeh said in April that Iran's crude output was close to the 4-million-bpd mark, adding that it could add an additional 50,000 barrels to daily production later this year.

On Thursday, oil prices rallied as a larger-than-expected weekly draw in USA crude inventories C-STK-T-EIA of 5.3 million barrels suggested that output cuts by the Organization of Petroleum Producing Countries (OPEC) and other producers were helping reduce a global glut in crude, analysts said.

Shortly before oil producers agreed in principle last September to stabilize the market, OPEC's analysts saw production outside of the cartel dropping by around 100,000 barrels a day in 2017.

While decreased stocks and an improving global economy were supporting oil demand, "continued rebalancing in the oil market by year-end will require the collective efforts of all oil producers to increase market stability", OPEC said.

OPEC and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group's members said.

US crude production C-OUT-T-EIA has risen more than 10 percent since mid-2016 to more than 9.3 million bpd, close to the levels of top producers Russian Federation and Saudi Arabia.

OPEC says what the world needs now is a bit less supply on the global oil market.

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On Thursday, non-members Turkmenistan and Equatorial Guinea said they would also join the cuts, though they are smaller producers. It showed the resilience of US shale production, and it dramatically cut spending in capital intensive projects in non-OPEC producers.

"U.S. oil and gas companies have already stepped up activities in 2017", OPEC said in the report.

But technological improvements in US shale plays has shattered that illusion as nimble American companies to pump out record levels of crude at increasingly lower break-even prices.

OPEC has asked a favor of other major producers: Please stop pumping so much and help us balance the market. The Organization of Petroleum Exporting Countries boosted estimates for growth in rival supplies by 64 percent, as producers in the USA shale patch, Brazil and elsewhere keep boosting production. But the OPEC report confirmed the cartel´s concern about a recovery in USA oil output.

The U.S. Energy Information Administration expects oil production to top 9 million barrels a day in 2017.

OPEC could try even deeper production cuts but OPEC members won't like that.

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