Oil rises as OPEC cuts outweigh United States drilling boom

The Organisation of the Petroleum Exporting Countries (Opec), of which Saudi Arabia is the de-facto leader, and other producers including Russian Federation pledged to cut output by 1.8 million barrels per day (bpd) in the first half of the year to lift oil prices.

The EIA raised its US oil production forecast to an average of 9.3 million barrels per a day (bpd) in 2017 and 10 million bpd in 2018 while it lowered its projection for average oil prices in 2017 to $52.60 a barrel for Brent and $50.68 for WTI.

OPEC and non-member oil producers are considering extending a global supply cut for nine months or more to avoid a price-sapping output increase in the first quarter of next year, when demand is expected to be weak, OPEC and industry sources said.

An extension of the deal would push supply down even further in the second half of the year, the IEA's Neil Atkinson said at the Platts Crude Oil Summit in London on Wednesday.

News of a possible extension of the OPEC cuts and reports that US crude stockpiles have dropped by 5.2 million barrels last week slightly boosted worldwide oil prices.

The oil nations decided late past year on an output cut of 1.8 million barrels per day (bpd) to reduce global oil inventories.

After securing strong gains following Wednesday's EIA report, oil prices consolidated in United States trading Thursday with concerns over rising production outside OPEC curbing further buying support.

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The 13-country OPEC is curbing its output by about 1.2 million bpd from January 1 for six months, the first reduction in eight years.

"OPEC and non-OPEC members have shown commitment to production cuts and an extension of the agreement. will assist in drawing stocks over Q3 and stabilising the market", BMI Research said in a note.

Global benchmark Brent crude was up 40 cents at $49.13 a barrel by 9:00am GMT. Saudi Aramco will reduce supplies to Asian customers by about 7 million barrels in June.

Non-cartel producers led by Russian Federation partially matched the cuts.

U.S. bank Goldman Sachs said that USA shale drillers "fundamentally changed" the oil industry due to their ability to ramp up output much faster than conventional producers.

While decreased stocks and an improving global economy were supporting oil demand, "continued rebalancing in the oil market by year-end will require the collective efforts of all oil producers to increase market stability", Organization of the Petroleum Exporting Countries (OPEC) said.

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