Takayuki Nogami at Japan Oil, Gas and Metals National Corp. said: "The stockpile of oil among OECD [referring to the Organisation for Economic Co-operation and Development] countries should be resolved if [the] oil reduction program is prolonged until the end of this year". In line with "stronger recent performance from the USA shale sector, we have revised upwards our expectation throughout 2017, and we now expect total USA crude production to exit the year 790,000 b/d higher than at the end of 2016, which is an upward revision of 100,000 b/d since last month's report".
Consequently, despite the production cuts being wiped out by the increasing U.S. supply, Saudi Arabia, the largest producer and defacto head of the OPEC, along with Russian Federation, has shown its willingness to extend the proposed 1.8 million (bpd) supply restrictions until March 2018. US West Texas Intermediate (WTI) crude futures were at $48.88, down 19 cents, or 0.4 per cent. USA crude oi lost US$1.02 to reach a low of US$48.05 was last trading 20 cents lower at US$48.87.
Friday's gains were the ninth in 11 sessions, a sharp turnaround since falling to a five-month low early this month. We could revise our price view higher should production costs begin to pick up at a faster rate than producers can improve efficiency. Otherwise all the efforts of the last six months will be for nothing.More news: Ex-US Rep. Anthony Weiner pleads guilty in sexting case
The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market. Many traders now expect those producers to cut output through next winter.
"Today's meeting is just informative", an OPEC source said. But recent bullish trends are still going.
"The current production cut has not been able to produce substantial results so far in terms of limiting the glut, so extending the cut into 2018 may not have a big enough impact".
Domestic U.S. production, meanwhile, was 9.3 million barrels per day, a year-over-year increase of almost 6 percent. "If you do get prices in the mid-to-upper $50s all that's going to do is encourage a lot of production in the US", said Nauman Barakat, head of the energy desk at ADM Investor Services in NY. That drop "was a case of sentiment over substance", said BMI Research.