Saudi Aramco's decision to reduce oil supplies to Asia has seen prices rally again after recent declines. 'Chief among (the) oil market's worries is that the renewed rise in USA oil production is reducing the speed at which the supply surplus is being eroded, ' Fawad Razaqzada, market analyst at Forex.com, said in a note.
Gasoline demand rose by 252,000 barrels a day, bringing the four-week average closer to levels at this time a year ago after a string of data showing weekly consumption declines.
While some fear a slowdown in Chinese oil demand, Sanford C. Bernstein & Co. doesn't see any cause for concern.
OPEC has asked a favor of other major producers: Please stop pumping so much and help us balance the market.
Gasoline stocks fell 150,000 bbl, compared with expectations in a Reuters poll for a 538,000-bbl drop. Supply in Cushing Oklahoma fell but 438,000 barrels as well.
Questions remain about the effectiveness of OPEC-led cuts.
The drop was evidence to some that demand is robust in the U.S. Others took it as proof that the move by OPEC and other big oil produces to cut global crude supply is working. US explorers added six oil rigs last week to 703, the highest since April 2014, Baker Hughes Inc. data show. Libya's most recent production reportedly climbed as high as 800,000 barrels a day, the highest since 2014, while Nigeria is set to crank up production after reaching an agreement with local insurgents. Crude processing volumes have increased in the second quarter in each year in EIA data going back to 1989. Growth in the nation's vehicle fleet will support gasoline demand, with increasing truck sales and air travel also helping fuel consumption, it said in a report dated May 9.
For the week ending on May 3, crude oil inventories plunged 5.25 million barrels, missing analysts' expectations for a draw of 1.79 million barrels. "OPEC has said it will try and extend its output cuts beyond June". They do not seem to fear the shale competition because they feel that they can compete even with less oil output. OPEC ain't afraid of no shale.
Also supporting prices were comments from Algeria's energy minister that Algeria and Iraq favor extending global supply cuts when Opec meets this month.
Oil prices rose yesterday, bolstered by the biggest one-week drop in USA inventories so far this year, and after Iraq and Algeria joined Saudi Arabia in supporting an extension to OPEC supply cuts. "The decision to decrease output will be for six months, and Algeria and Iraq maintain a united stand for the next cuts", Boutarfa said.
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