Oil Up as Saudi Arabia Set to Lead Production Cut Efforts

Oil Up as Saudi Arabia Set to Lead Production Cut Efforts

Oil Up as Saudi Arabia Set to Lead Production Cut Efforts

Oil dipped yesterday with Brent trading at $67.44 per barrel and US West Texas Intermediate crude at $63.79 before weekly data that is forecast to show rising US crude inventories, although investor confidence in OPEC's ability to curb output helped stem the price slide.

The US stock drawdown was due to oil market backwardation, lower imports and higher exports.

So, the price of North sea Brent crude oil on Monday morning, February 26, overcame a mark of 67 dollars per barrel.

On Tuesday afternoon, the West Texas Intermediate (WTI) and Brent, two major oil price benchmarks, went down by 1.89 percent and 1.52 percent to 62.70 USA dollars and 66.27 dollars a barrel respectively.

That means rather than the USA becoming awash in oil once again as shale drillers ramp up production, much of the additional barrels could be shipped overseas.

Both benchmarks rose last week - Brent by nearly 4 per cent and WTI by 3 per cent. FRX/ A strong dollar makes oil more expensive for buyers using other currencies.

Soaring U.S. production has pressured oil futures at a time when members of the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation have reduced output in an attempt to support prices.

API reports growth in US oil inventories

Oil prices have rebounded to around $70 a barrel as a result of the policy.

Oil steadied around its highest prices in three weeks on Monday, supported by comments from Saudi Arabia that it would continue to curb shipments in line with the Opec-led effort to cut global supplies.

Last month, Energy Minister Khalid Al-Falih said that although a surplus in global crude markets could persist into 2019, "I personally believe we'll be rebalanced by the end of 2018". It will reassure those Americans that fear the U.S. is always being held to ransom by Middle East, even though the USA spends a huge amount on defending the regions' oil fields - think Desert Storm and all that.

For the record, al-Falih foresees a monitoring mechanism not too far removed from the one that now governs the OPEC cuts: "What we want is an evergreen framework that brings producers from OPEC and non-OPEC (countries) together in a market monitoring fashion that allows us to take quick decisions".

"Production numbers and rig counts are just as important at this stage, particularly with U". Prices on Friday rose 78 cents, or 1.2%, to settle at $63.55, the highest in more than two weeks. Crude stocks at the Cushing, Oklahoma, delivery hub for US futures USOICC=ECI fell 2.7 million barrels last week.

"In spite of refiners undergoing maintenance, they continue to process more crude compared to previous years adding to gasoline and diesel supply", said Andrew Lipow, president at Lipow Oil Associates in Houston.

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