Saudi Arabia says oil curbs could extend beyond end of 2017
- Author: Eleanor Harrison May 12, 2017,
May 12, 2017, 2:18
Meanwhile, Brent crude oil, the Global benchmark, is up 1.9% at $49.89 per barrel on Wednesday, and has lost 12.4% this year. USA light crude oil CLc1 was up 35 cents at $47.68.
Despite these statements from Saudi Arabia, crude prices remain near levels seen before OPEC announced its plans to cut late previous year.
A cornerstone of the Saudi promise to rebalance the market would be to extend, potentially into 2018, a pledge led by the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation to cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year. News that the curbs might last into 2018 fueled a modest rally in the market.
"Although OPEC is apparently putting on a renewed push to support values, this looks like the only significant bullish consideration now available to the energy complex", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note. "Six months is not enough as we'll still be well above five years average of stocks".
Market participants are now largely expecting OPEC to extend, and possibly deepen, the supply cuts when they meet for a summit on May 25.
However, many analysts only see an overbundance of talk from OPEC members, as opposed to action regarding stockpiles.
Since a low point in May 2016, United States producers have added 387 oil rigs, or about 123%, Goldman Sachs said.
"Those claims do not withstand the reality check with the inventories staying stubbornly high and non-OPEC production rising strongly".
Countering those efforts, U.S. drillers added oil rigs for a 16th week in a row last week, extending a drilling recovery into a 12th month, energy services firm Baker Hughes Inc said on Friday.
World stocks held near all-time highs on Thursday, helped by a rebound in energy shares as oil prices rose after US fuel inventories declined and Saudi Arabia cut supplies of crude to Asia more than expected.
The market weakness has sparked selling from speculators.
Gasoline demand rose by 252,000 barrels a day, bringing the four-week average closer to levels at this time a year ago after a string of data showing weekly consumption declines.