Crude Oil Jumps 5% This Week, Settles Above USD50

OPEC considering to cut back their oil output until March 2018

OPEC considering to cut back their oil output until March 2018

Readers may remember the joint statement made by Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak on May 15, when they said OPEC would "do whatever it takes" to bring global oil inventories back to five-year average levels, says the Nikkei Asian Review. West Texas Intermediate for June delivery rose 88 U.S. cents, or 1.5%, to $50.23 a barrel at 9.59am on the New York Mercantile Exchange. The U.S. Energy Information Administration said inventories fell 1.8 million barrels in the week to May 12 to 520.8 million barrels.

Oil futures rose on Friday to the highest in almost a month on growing optimism that big producing countries will extend output cuts to curb a persistent glut in crude, with key benchmarks heading for a second week of gains.

"Crude stocks are still higher than last year's stock levels ..." Its meeting precedes the gathering of Opec and non-Opec oil ministers on May 25 to decide whether to extend beyond June 30 their deal to reduce output.

Though the deal proposed a cut of 1.8 million barrels, commodity analysts are of the view that this number could be increased.

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The agency kept its global demand growth forecast for 2017 unchanged at 1.3 million barrels per day (bpd) due to a gradual decrease in previously active consumer markets, including the US, Germany, and Turkey. At the same time, compliance with OPEC's agreed 1.2-million bpd cut remained robust at around 96 percent. United States light crude rose 18 cents to $48.84, Reuters reported. "The extension alone should result in deeper cuts", he said, stressing that U.S. production would stop the rebalancing of the market this year. Crude was up 67 cents to $49.32 a barrel as of 10:48 a.m. EDT, though prices are still 8 percent below April's peak of $53.76.

U.S. production has risen 850,000 barrels per day (bpd) from its 2016 lows to 9.3 million bpd now, not far from the all-time record set in 2015. Non-OPEC oil supply in 2016 is estimated to have averaged 57.30 mbpd, representing a decline of 0.71 mbpd over the previous year, and a downward revision of 0.02 mbpd from the last assessment. Its crude exports rose 275,000 bpd in March from February and its stockpiles increased, official data showed on Thursday.

"The current production cut has not been able to produce substantial results so far in terms of limiting the glut, so extending the cut into 2018 may not have a big enough impact".

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