Crude Stocks Rise For Eighth Straight Week As Exports Ease Off Record

Posted March 03, 2017

The rising output of nimble USA shale oil producers is cited as evidence that the production cuts agreed to in November by the Organization of the Petroleum.

Saudi Arabia continued to lead OPEC's efforts to cut production, helping the organization get closer to a goal set out in a historic accord a year ago.

OPEC reached a deal to cut oil production in December 2016, the first deal that both OPEC and non-OPEC producers, led by Russian Federation, agreed to since 2001. OPEC has achieved 86 percent compliance rate on the proposed cuts in January 2017.

The International Energy Agency has said it was impressed with OPEC's compliance, calling it a record level. While OPEC countries are mostly compliant on the production cut, a succumbing thought of anyone can cut their ties is still a lingering possibility.

Analysts predict another improvement in inventory last week, which may further negate the effect of OPEC-output cut to end global oversupply.

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By contrast, compliance within the Organization of the Petroleum Exporting Countries is 94 percent, due mainly to a steep reduction by Saudi Arabia.

Michael Wittner, global head of oil research at Société Générale, said: "US inventories moved directionally in line with expectations, and with relatively small stock changes across the board". In December, Saudi Arabia's refinery output reached 2.96 million barrels per day, the highest level in nearly 15 years.

Oil production in Iran will reach four million bpd by the beginning of the next Iranian calendar year (March 21), National Iranian Oil Company Managing Director Ali Kardor said on February 18. USA stockpiles expanded to 520.2 million barrels, the most in weekly government data going back to 1982. Meantime, oil exports surged to a record. While gasoline inventories fell last week, the decline was smaller than expected, exacerbating concerns over a glut that could pressure oil prices.

Crude futures were marginally weaker Thursday morning in Asia, with the downward pressure from a rise in weekly U.S. stocks having mostly worked its way through, and attention expected to gradually swing back to the OPEC/non-OPEC supply cuts, which have been cementing their bullish hold on market sentiment.