Oil prices rise in Asia in expectation of Aramco supply cut TOKYO: Oil futures rose in Asian trading on Wednesday after Reuters reported Saudi Arabia would cut supplies to the region as OPEC battles against rising USA output that is threatening to derail its attempts to end a sustained global glut in crude.
OPEC on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage us shale drillers to pump more, hampering OPEC efforts to clear a glut and support prices by cutting its output.
Khalid al-Falih, Saudi Arabia's energy minister, was quoted in the Financial Times saying he expected OPEC to extend its production deal until at least the end of 2017 when they meet on 25 May, stating the cartel is prepared to do "whatever it takes" to bring about an end to low oil prices.
Following the release, West Texas Intermediate, the USA crude marker, was up 2.5 per cent to $47.03 barrel, while Brent crude, the global oil benchmark, rose 2.4 per cent to $49.90 a barrel.
"While OPEC is trying to cut production, Libyan output is at its highest level since October 2014 and US shale oil has added 800,000 barrels to the market", he said.
Weekly U.S. data on crude production and inventories, plus monthly reports on supply and demand from the Organization of the Petroleum Exporting Countries and the U.S. Energy Information Administration this week, should provide a detailed picture of how quickly global crude inventories are falling.More news: Canada Responds To Launch Of US NAFTA Consultations
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The Saudi oil giant made a decision to cut oil supplies to the Asian market in June by around 7 million barrels, a source told Reuters, as part of a wider OPEC agreement to help buoy prices.
Crude oil production estimates call for an average of 9.3 million barrels a day in 2017, up from 9.2 million barrels in last month's forecast.
Brent crude was up just 3 cent at $49.13 a barrel by 0959 GMT, after trading as high as $49.92 earlier in the session.
While OPEC and producers have reduced output there have been few signs that supply has fallen significantly as other producers have shielded many key customers, especially in Asia, from cuts. "For 2017, total U.S. liquids production is forecast to increase by 0.82 mb/d with crude oil contributing 0.6 mb/d", OPEC said. Russian Federation also said it was discussing prolonging cuts with other producers beyond 2017.
Crude oil gains are expected to be limited, however, because of an unexpected build in gasoline inventories. Goldman Sachs' head of commodities Jeff Currie said this week the market is already in a supply deficit.