Oil rises as Opec cuts outweigh higher output
LONDON: Oil prices rose on Tuesday as expectations that major Opec exporters would extend output cuts into the second half of the year outweighed rising production in the United States, Canada and Libya. Benchmark Brent crude oil was up 30 cents at $51.82 a barrel by 0840 GMT. The futures contract hit a onemonth low of $50.45 last week after the restart of two Libyan oilfields. US light crude was 20 cents higher at $49.04.
The Organisation of the Petroleum Exporting Countries and several other key producers including Russia have agreed to cut output by 1.8 million barrels per day (bpd) for the first half of 2017 to try to reduce a global glut.
Opec and other producers will meet on May 25 and are widely expected to keep output limits for the rest of the year.
“The second half of the year looks brighter, provided Opec remains at least as disciplined as during the first half of 2017,” said Tamas Varga, analyst at London brokerage PVM Oil Associates. But oil market sentiment is fragile and many investors are concerned by the slow pace of inventory drawdowns, with stockpiles still near record highs.
Libya’s National Oil Company said on Monday production had risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
US crude output is at its highest since August 2015, while the Syncrude Canada oil sands project has started shipping crude from its Mildred Lake upgrader again after cutting production due to a fire in March.
Oil prices found some support from data showing Russian oil output fell slightly to 11 million bpd in April from 11.05 million bpd in March. But much of the news has been negative for oil.
A private survey on Tuesday showed China’s factory sector lost momentum in April, with growth slowing to its weakest pace in seven months. US crude inventories are expected to mark a fourth straight week of declines from a record high hit at the end of March, but stocks are still seen about 10 per cent above year-end levels, according to Reuters calculations. -
Opec and other producers will meet on May 25 and are widely expected to keep output limits for the rest of the year.