No talk about further OPEC supply cuts: UAE
Oil prices rise to two-week high
PARIS/LONDON: There is no talk of further oil output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies despite only a slow drawdown in inventories, the UAE’s energy minister said on Thursday.
“I think OPEC countries and non-OPEC countries who joined us have done their part. We are looking at others to do their part as well. We are not worried about the market recovery,” Energy Minister Suhail bin Mohammed Al-Mazroui told journalists on the sidelines of a conference in Paris.
OPEC and allied non-OPEC producers agreed on May 25 to extend an existing supply curb into 2018 but oil prices have fallen on rising production from the US and from Nigeria and Libya, two OPEC members exempt from cutting output.
“Of course additional production coming from several producers is prolonging the recovery but I think that is rather short-term. We hope to see more recovery in the third and fourth quarters,” he said.
“There has been a correction, yes, the correction is a little bit slower than expected. We are at the bottom of the second quarter and it is always a low-demand quarter. Third and fourth quarters, we will have a pick-up in demand and hopefully reach a more balanced market,” Al-Mazroui said.
Oil prices rose to a two-week high on Thursday, extending a rally into a sixth straight session after a decline in weekly US production eased concerns about deepening oversupply.
Crude prices slipped to the lowest in 10 months last week but have since rebounded more than 7 percent, stretching their bullrun to the longest since April.
Global benchmark Brent crude futures were up 43 cents at $47.74 a barrel at 1321 GMT, having touched a two-week high of $47.98 earlier in the session.
US West Texas Intermediate (WTI) crude was up 40 cents at $45.14 a barrel. It registered an intraday high of $45.38, also a two-week peak.
“After the steep drop in oil prices of recent weeks, I believe that especially hedge funds saw nice buying momentum and lower US crude production was the trigger to act,” said Hans van Cleef, a senior energy economist at ABN Amro.
US government data showed on Wednesday that domestic crude production dropped by 100,000 barrels per day (bpd) to 9.3 million bpd last week, the steepest weekly fall since July 2016.
Some analysts and traders said the decline was related to temporary factors such as production shutdowns in the Gulf of Mexico due to Tropical Storm Cindy and maintenance in Alaska.
“These production outages are, therefore, likely to be made good again in the coming weeks, meaning that a noticeable rise in US oil production can be expected. It is thus doubtful whether (the) price rise will really prove lasting,” analysts at Commerzbank wrote.