According to OPEC, rising United States domestic production, lower exports and seasonal lower refiner runs boosted U.S. crude stocks to a record level of about 534 million barrels in the last week of March.
But Saudi Arabia said it lowered production by 110,000 barrels per day last month to 9.9 million barrels, after increasing production in February. Prices have dropped 1.6 per cent this year.
The Energy Department believes another burst of shale drilling could push USA oil production close to an all-time record by the end of next year.
WTI futures for April delivery were marked around 0.37% higher from Tuesday’s close at $53.60 per barrel, after having traded as high as $54.00 earlier in the session.
The spread between crude oil inventories and the five-year average started to widen in January 2015 after it broke four-year highs and hit record levels. The monitoring committee, led by Kuwait, which consists of both OPEC and non-OPEC members said last month it has been satisfied with the compliance levels.
Saudi Arabia has made significant cuts, slashing production by 4.5 percent since late 2016 despite a slight growth in March to 9.98 million barrels per day (bpd). WTI is now slowly grinding higher, along with the Brent.
The U.S.is poised to produce a record amount of crude oil next year, according to data from the Energy Information Administration.
Reports have suggested that the cartel, prompted by kingpin Saudi Arabia, may extend the output cut deal by another six months when its members meet at the end of May. Saudi’s likely support means a lot to oil price. Russian Federation and 10 other non-Opec producers agreed to cut half as much.
“Given yesterday’s developments in the oil market it is rather surprising to have seen limited price gains across the board”, PVM Oil Associates analyst Tamas Varga said.
With demand expected to rise by 340,000 bpd in 2018, that would leave increasing amounts of USA oil for export or storage.
The OPEC is expected to release a statement later this week regarding the ongoing production cuts and their agreement to bring down global oil storage numbers.
US shale continues strong rebound after market was flooded by supply and prices plunged in 2014. “The market is focused on where the market is heading, not where it’s been, and crude supplies are going to be whittled down”.
“Upward revisions were seen in Russia’s production due to the approval of production ramp ups from the three new projects started up a year ago including Filanovsky in the Caspian”, the OPEC said.