OPEC 'optimistic' oil output cuts leading to price recovery

OPEC 'optimistic' oil output cuts leading to price recoveryā€¯

Brent futures were up 15 cents to $53.08 a barrel were at 11:40 a.m. EDT (1540 GMT).

The continued growth in USA production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook.

US inventories now sit at 532.3 million barrels, only down about 3 million units from the record reached in March. USA production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.

Looking ahead for oil, "the next big market mover looks to be when OPEC meets regarding an extension in production cuts on May 25", said Macaluso.

Crude output at major USA shale plays is forecast to climb to 5.2 million barrels a day in May, the highest since 2015, according to the Energy Information Administration's monthly Drilling Productivity report.

Oil edged lower after a report showed US gasoline supplies increased for the first time in nine weeks even as crude stockpiles dropped.

Data from the American Petroleum Institute showed on April 18 that although crude inventories fell by 840,000 bbl in the week to April 14, they remained near record highs.

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Oil prices dipped on Wednesday as bloated US supplies weighed on markets while a fall in Saudi crude exports was offset by rising production in the country. US crude futures were up 43 cents at $50.87 a barrel. Still, major disturbances in Chinese oil demand, Russian output, or other aspects of geopolitics can overpower the effects of the bloc's efforts.

"Compliance among Opec member countries has been very high to cut output to rebalance oil markets in the first three months of the deal", said Mohammad Barkindo.

Opec was due to meet on May 25 to weigh an extension of output cuts beyond June to alleviate a glut that has depressed prices for almost three years.

Brent crude futures LCOc1 traded at $54.92 per barrel, while the US West Texas Intermediate (WTI) crude futures CLc1 also remained nearly unchanged from the last close at $52.43 a barrel, reported Reuters.

Citi appears to be shrugging off the losses, and in a note its analysts state that "With a continuation of the OPEC/non-OPEC producer deal in the second half of 2017 and the expected associated inventory draw-down, we expect oil prices to move above $60 a barrel by the second half of the year". Other sources corroborated Saudi Arabia and Kuwait's support of Iraq's stated goal, which will barely generate enough revenues to sustain Baghdad's ongoing war with the Islamic State in Mosul.

The group agreed to let Iran pump an additional 90,000 barrels a day to reach output of about 3.8 million as the country recovers from sanctions.

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