Expert comments on possible extension of oil output cut

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Expert comments on possible extension of oil output cut

Saudi imports to the US, formerly its largest export market, have declined to around 30,000 barrels per month, from over 50,000 barrels per month in April 2014 according to EIA data. The actual amount of crude stock in the U.S. has outperformed the street expectations.

"Opec has done their part, but USA inventory data is still rising, keeping the lid on the oil price", said Aslam, commenting there were no signs of a demand shock for crude and for the price to rise further and start a new journey.

Thailand's largest oil refiner Thai Oil has bought its first ever cargoes of US Eagle Ford crude and Oman crude as its diversifies purchases amid OPEC production cuts, two sources with knowledge of the matter said on Friday.

Also, the price OPEC basket of 13 crudes stood at $48.28 a barrel, compared with $49.23 the previous day, according to OPEC Secretariat calculations.

US crude futures settled down 0.7% at $47.70 a barrel, and Brent crude dipped 0.2% to $50.56. OPEC last month achieved 91 percent of its pledged cuts, while Russian Federation and other allies delivered about 44 percent, according to data from the International Energy Agency. Speculators attributed the rise in stock to an increase in US oil production and a rise in oil imports.

Nationwide stockpiles increased by 4.95 million to 533.1 million barrels in the week ended March 17. If prices suddenly spike to the downside then this will indicate that investors are betting on the end of the OPEC deal.

Lipow noted that the China National Offshore Oil Corp.is expected in May to complete a refinery expansion in southern China that could absorb about 80,000 barrels a day of Saudi oil.

Georgia gas prices averaged $2.17 Sunday - 2 cents less than a week ago, 1-cent less than a month ago, and 21 cents more than a year ago.

At the same time, fuel prices are still under pressure from rising USA drilling.

Compliance to the agreed cuts remains admirable, but supply remains high and the market appears stuck.

Saudi losses from the two-year "war" over market share with USA producers has cut into its once-dominant market position.

"While speculations have heightened over Opec extending the supply cuts by another six months, questions may be raised if such may stabilise the oil markets especially when factoring the resurgence of USA shale".

Domestic crude production increased 0.23 percent to 9.1 million barrels a day - the highest level since February 2016.

If prices remain under pressure then this will indicate that investors are betting on increased US production. But after nearly three years of a weaker price, regional governments now need to borrow.

So, there is still rather high state of uncertainty on global fuel market: OPEC efforts to cut the supply are being compensated by rising US drilling activity.

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