Iraq, Algeria support extension of oil production cuts

Hope seems to be rising for Nigeria and other oil producers as oil prices rose more than 3 per cent on Wednesday, bolstered by the biggest one-week drop in USA inventories so far in 2017.

The EIA figures also revealed a surprise decrease in gasoline and distillate inventories, which helped mitigate worries that USA commuters weren't soaking up enough gasoline to offset supply.

In an overnight trade, crude futures also climbed sharply during the session on Wednesday as investors were enthusiast with the latest report from the Energy Information Administration (EIA), which revealed US crude inventories declined more than expected.

Also supporting prices were comments from Algeria's energy minister that Algeria and Iraq favor extending global supply cuts when Opec meets this month.

Production rose, however, and gasoline demand over the last four weeks was 2.5 per cent lower than at the same time period a year ago. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.3% at $47.93 a barrel. Brent crude was last up 2.6 percent to $50.02 a barrel.

The Organisation of Petroleum Exporting Countries (OPEC) has called on United States shale oil drillers to cut output for the prosperity of global economy.




While US oil inventories fell, the country's oil production continued to rise, jumping above 9.3 million bpd last week, in what is now a more than 10 percent increase since its mid-2016 trough.

In a monthly report, the Organization of the Petroleum Exporting Countries revised up its estimate of oil supply growth from producers outside the group this year to 950,000 barrels per day (bpd), up from a previous forecast of 580,000 bpd.

Ibe Kachikwu, Nigeria's oil minister, had earlier hinted that he expected an extension in the cut.

Also yesterday Aramco announced that it was cutting supplies to its Asian clients by 7m in June which is important as up until now those clients had received all of their quotas. Aramco had previously maintained supplies to important Asian customers.

The forecast for 2018 rose to 1.95 million barrels per day as compared to 1.91 million barrels per day in April report. The volume of crude held in floating storage on tankers - often a key indicator of a supply surplus - is dropping like a brick, he said.

The 13-country OPEC is curbing its output by about 1.2 million bpd from January 1 for six months, the first reduction in eight years.

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