Oil closed near $53 a barrel in New York as Saudi Oil Minister Khalid al-Falih said that OPEC and its partners are making good progress in delivering promised output curbs.
Saudi Arabia has yet to decide whether to extend the cuts into the second half of the year, al-Falih said in a speech at CERAWeek in Houston on Tuesday. OPEC members Iraq and Angola signaled at the same conference on Monday that they’re willing to prolong the accord if it’s necessary. U.S. crude production is projected to surge to a record next year as domestic drillers respond to higher prices spurred by the cuts elsewhere, according to a government report.
Crude has fluctuated above $50 a barrel since the Organization of Petroleum Exporting Countries and other state producers started trimming output on Jan. 1. The rally in recent months has spurred a rebound in U.S. shale-oil production, but larger-than-expected cuts elsewhere and signs of growing demand suggest stockpiles will decline, Goldman Sachs Group Inc.’s Jeff Currie said on Bloomberg TV.
“If OPEC can stick to its cuts and shale output doesn’t climb more than expected, oil can break to the upside,” Tim Pickering, founder and chief investment officer of Auspice Capital Advisors Ltd. in Calgary, said by phone. “Seasonally, this is a time when inventories build so traders are being cautious. I think this should change in the next 30 to 60 days.”
West Texas Intermediate for April delivery fell 6 cents to settle at $53.14 a barrel on the New York Mercantile Exchange. Total volume traded was about 17 percent below the 100-day average. Prices averaged $53.46 last month.
Brent for May settlement slipped 9 cents to $55.92 a barrel on the London-based ICE Futures Europe exchange, and closed at a $2.28 premium to WTI for the same month.
The Saudi comments signal a shift by al-Falih, who said at a conference in Davos two months ago that the deal could probably end after six months, and were in line with comments made by Russia’s energy minister on Monday.
Russia, the biggest non-OPEC producer to join the deal, feels it’s premature to discuss extending the output cuts, Oil Minister Alexander Novak said Monday. Iraq’s Oil Minister Jabbar Al-Luaibi said in an interview his country was “looking forward for improvement in the price.”
As the supply reduction boosts prices, oil companies are reviving investment following a two-year rout, the International Energy Agency said Monday. U.S. oil drillers boosted the rig count by seven to 609 last week, the most since October 2015, according to Baker Hughes Inc.
U.S. crude output will average 9.21 million barrels a day in 2017, up from 8.98 million projected in February, according to the Energy Information Administration’s monthly Short-Term Energy Outlook released Tuesday. Output is projected to increase to an average 9.73 million barrels a day for 2018, and top 10 million barrels a day in December 2018.
- U.S. crude stockpiles probably rose by 1.39 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Supplies of gasoline and distillate fuel are projected to have dropped.
- Iran’s crude-oil exports touched 3 million barrels a day for the first time since the 1979 Islamic Revolution.
- Energy Transfer Partners LP will soon be flowing oil through its controversial Dakota Access pipeline after defeating a Native American tribe’s challenge to stall the project on religious grounds.
- Libya’s crude production made a partial recovery after clashes between rival armed groups led to a halt in shipments from two of the OPEC member’s biggest oil ports.