Crude oil returns to $50 per barrel as decline in U.S. supplies extends recovery

Crude oil rose to $50 per barrel for the first time in six months amid an accelerated fall in U.S. crude supplies and curtailed  supplies have also been curtailed in Nigeria, Venezuela and Canada.

Futures climbed as much as 1.3 percent in New York to $50.21, the highest price since 9 October 2015. Brent crude topped $50 for the first time since November earlier on Thursday.

According to U.S.-based energy agency EIA, U.S. crude production dropped for an 11th week to 8.77m barrels a day.

Crude inventories slid by 4.23 million barrels last week, exceeding an expected drop of 2 million. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell by 649,000 barrels.

Further, The Organization of Petroleum Exporting Countries (OPEC) is unlikely to set an output target when it meets June 2 as it sticks with Saudi Arabia’s strategy of squeezing out rivals, according to all but one of 27 analysts surveyed by Bloomberg.

Source: Bloomberg

 

 

Inconclusive over production output, crude stays at lows

With barely a week passing by since top crude oil producers discussed the possibility of freezing output to prop up crude oil prices, Saudi Arabia has already ruled out a production cut. Saudi Arabia’s oil minister Ali al-Naimi stated that the co-ordinated production cuts would not fructify as many producing nations were not willing to do so.

It is also known that Iran has already ruled out freezing output. Non-OPEC member Russia has so far agreed to reducing its supply.

Iran’s oil minister Bijan Zagahneh was quoted as describing the move as a “joke”. His comments came as nations had asked Iran to restrict output to 1m barrels a day but increased theirs to about 10m barrels for export.

This sort of a disagreement continues to keep WTI Crude at $31.48 (NYMEX) and Brent Crude at $32.95 a barrel.

Source: Reuters