Oil Prices Steady as Market Awaits OPEC Decision

Oil Prices Steady as Market Awaits OPEC Decision

Oil Prices Steady as Market Awaits OPEC Decision

Iran cut back crude oil production last month in a move that reflects its adherence to a global supply cut deal and OPEC's efforts to shore up prices and restore balance to the beleaguered oil market.

West Texas Intermediate for June delivery fell 13 cents, or 0.3 percent, to $47.70 a barrel at 11:10 a.m. on the New York Mercantile Exchange.

OPECs monthly report says world oil supply growth for 2017 had increased by 37,000 barrels a day with growth in demand seen to remain at 1.27 million barrels a day.

"Owing to the rapid recovery in USA oil production, OPEC obviously only has limited influence on prices via supply curbs", it said, adding an extension "is unlikely to be more successful than the cuts implemented so far in the longer-term".

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On Thursday, OPEC's own monthly oil market report said that production from non-members would rise 64 percent faster than previously forecast this year, driven mainly by US shale fields.

"The dilemma now for OPEC and their key non-OPEC partners Russian Federation and Oman is that cutting to support prices risks stoking the embers of a shale fire storm", said Adam Ritchie, director at Petro-Logistics in Geneva.

OPEC de-facto leader, Saudi Arabia, is increasingly unable to control the global oil supply because of rising energy production in the U.S., Russian Federation and Iran. In particular, they would really appreciate it if the United States would stop producing so much damn oil...for the good of the world of course.

"The [U.S. crude] inventories turned the heads of market participants towards the more positive side of things", said Eugen Weinberg, Commerzbank head of commodities research.

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Changes in drilling-rig counts on the ground tend to follow a few months after shifts in hedging activity, since many shale companies prefer to hedge new production before committing to more spending, Dannesboe said. US drillers have dramatically reduced their hedging activity, a move that could portend a break in the production gains that have upended global crude prices.

The two biggest producers participating in the cuts, OPEC's Saudi Arabia and non-member Russian Federation, both signaled willingness on May 8 to extend the deal. US light crude oil was up 7 cents at $47.90.

Opec also said it sees more supply coming from non-member countries such as the US.

"As such, it is likely to extend its production cuts by the minimum amount of time necessary to bring stocks down to more normal levels", he noted.

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