UAE, Saudi oil ministers discuss oil market developments

Vladimir Smirnov  TASS

The supply cut helped boost crude prices above $58 a barrel in January, but prices have since slipped back to around $54, as the effort to clear a supply glut has taken longer than expected.

The kingdom and Kazakhstan said such an extension "would be considered in due course as market fundamentals may dictate", according to a separate Saudi statement. While the decline in production and increase in demand is working to raise prices, it follows an extended period of over-supply of oil.

Crude oil exports rose to 774,000 barrels a day last week, up by 621,000 barrels over the prior week and 356,000 barrels more than at the same time a year ago.

US West Texas Intermediate (WTI) crude was down 30 cents at $47.77 a barrel. World Oil Supply Non-OPEC oil supply is expected to grow by 0.78 mb/d in 2017, unchanged from the last month due to offsetting revisions in Kazakhstan and USA supply.

Oil prices rose on Tuesday after OPEC forecast higher demand in 2018 and Russian Federation and Venezuela confirmed their commitment to a production-cutting deal in an effort to reduce the global crude glut.

It was the first fall in global production in four months.

However, crude stockpiles in the USA have ballooned recently as Harvey crippled refinery production in the Texas and Louisiana region.

However, in its monthly report released, yesterday, OPEC stated that the world economic growth had been revised up for 2017 to 3.5 per cent from 3.4 per cent, while the growth forecast for 2018 remains unchanged at 3.4per cent.

Separately, analysts polled by Reuters expected US crude stocks to have risen by 2.3 million barrels last week while those surveyed by Bloomberg expected a build of 4.9 million barrels.

"OECD product stocks were only 35 million barrels above the five-year average at end-July", the IEA said. According to the EIA, the lower refinery demand for crude oil and limited ability to move crude oil resulted in crude oil inventory builds at Cushing, Oklahoma, and the Gulf Coast of 800,000 barrels and 1.7 million barrels respectively as of Friday, September 1. Nigeria is expecting pressure from other OPEC members at the cartel's regular meeting in November this year, He also expressed his skepticism of initial OPEC oil price target of $60 per barrel in the wake of the deal.

It was the second continuous production since the Hurricane Harvey shut production in some Gulf of Mexico fields and refineries in Texas, while some domestic manufacturers also cut output to avoid further excess output.

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