Saudi Energy Minister Praises OPEC Oil Price Boost

Cornelia Mascio
Aprile 20, 2017

On April 18, oil prices dropped, hitting their lowest in 11 days, following the US Energy Information Administration said it estimates for a combined 124,000 barrels-per-day growth in US shale production over May, Reuters reported.

The same report also mentioned that Iranian oil minister Bijan Zanganeh said that most oil producers support an extension of output cuts by OPEC and non-OPEC countries including Iran.

Futures fell as much as 1 percent.

West Texas Intermediate for May delivery dropped 73 cents, or 1.4%, to $51.68/bbl at 12:33 p.m. on the New York Mercantile Exchange.

June Brent crude on London's ICE Futures exchange rose 8 cents, or 0.2%, to $52.99 a barrel. That surprise build in gasoline, along with an increase in US production, pressured prices.

The report also stated that oil production in February increased to ten million bpd from 9.75 million bpd in January as more oil was processed by domestic refiners.

U.S. stockpiles and production have cast doubt on whether the cuts were enough.

A number of key OPEC members including top exporter Saudi Arabia support extending their supply cut into the second half of 2017 if all participating producers, including Russian Federation and other non-OPEC countries, agree, OPEC sources have told Reuters.

US crude fell about 0.7 percent to $52.27 a barrel by mid-day Tuesday. United States gasoline inventories are 8.3% below their all-time high.

Latest data from the Energy Information Administration showed USA output rose to 9.25 million barrels a day last week, the highest level since August 2015.

Crude oil prices have moved in a narrow band between $50 per barrel and $55 per barrel for several sessions, masking some of the volatility from emerging geopolitical strains that followed a mid-April military strike on Syrian targets by the United States.

Oil fell to a two-week low on Wednesday, after a surprising build in USA gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut.

This means that the Saudi oil may still make its way into a glutted global market as significant proportions of its refined fuel products are exported.

Nigerian crude was also preferred by USA refiners as her oil is of similar quality to that produced in the Bakken region in parts of North Dakota and Montana.

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