WTI, Brent crude oil futures settle lower

Kuwait supports extending the agreement after its June expiry date to help rebalance the global market, he added.

I would argue that OPEC would find the alternative to be much harder for its members to digest. As the defacto leader of OPEC, it is left to implement most of the production cuts to ensure a high level of overall group compliance.

Even though crude oil output cuts improved the market sentiment, concerns about an increase in USA shale oil production and an unexpected rise in crude oil inventory levels weighed on oil prices.

USA crude rose 27 cents to US$48.67 a barrel, after dipping in the previous session to US$47.90, its lowest since November.

West Texas Intermediate (WTI) oil, the USA benchmark, fell $1.23 a barrel to $49.05 on Thursday, and is down 9% in March. Saudis know that OPEC might not get another chance if it doesn’t adhere to its production cuts. Investors are now looking for indications that OPEC will extend its reductions beyond June. The higher prices have led to higher profits, however, even in the U.S. These prices have incentivized increased U.S. production, allowing companies to be drilling at their highest rates in over a year, posed to reach record levels by year-end. So why are the oil markets so nervous? The U.S. growing the market while OPEC is attempting to retreat spells trouble for the Middle Eastern conglomerate.

However, while production from the Middle East has ebbed, US oil producers are increasing their production. Its next meeting is May 25th in Vienna.

In the meantime, US shale producers have already started to increase output much faster than was expected six months ago. This will offset at least some of OPEC’s cuts. Iraq and Angola, two other OPEC members, have signaled a willingness to back cuts beyond the first half of this year.

United States drillers boosted the rig count by eight to 617 last week, according to data Friday from Baker Hughes.

OPEC production fell in February as Saudi Arabia continued to compensate for other cartel members who have not yet achieved promised output cuts. Russian Federation has not lived up to expectations and Iraq is producing more. Non-member production, including that from USA and Canadian shale drillers, is likely to grow by 400,000 BPD, OPEC said. Meanwhile, the actions and statements of the second and third largest producers in OPEC are throwing worrying signs at the oil bulls. USA oil output in 2017 was revised up by 100,000 bpd. That’s a totally different situation than with OPEC. It sees a rise of 109,00 barrels a day (bpd) in April oil production, from a month earlier.