OPEC 'optimistic' oil output cuts leading to price recovery

Oil producers at ease as output deal reaches half-time

There is a strong probability that United States production will increase again and a sharp draw in inventories will be needed to boost overall sentiment. "Ahead of summer driving season, it is surprising to see a lag in demand".

U.S. West Texas Intermediate crude futures were also down 18 cents at $53. They touched an intraday low of $54.98, the weakest level in 11 days.

With the cumulative loss of 4.8 million barrels in the month under review put in cost at the prevailing $55.89 per barrel for Brent crude, Nigeria is estimated to have lost over $271.8 million (N82.8 billion).

Crude output at major U.S. shale plays is forecast to climb to 5.2 million barrels a day in May, the highest since 2015, according to the Energy Information Administration's monthly Drilling Productivity report.

American Petroleum Institute (API) reported that United States markets continue to remain oversupplied though crude inventories slipped by 840,000 barrels in the week up to 14 April to 531.6 million barrels.

"Rising U.S. production levels are offsetting more than a third of the six-month agreement of the 1.8 million barrel-per-day cut", McGillian said. Wholesale gasoline prices declined 1-2 cents toward the end of last week.

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Although crude inventories fell by 840,000 barrels in the week to April 14 to 531.6-million barrels, they held near record highs, while petrol stocks rose 1.4-million barrels as refinery runs increased by 334,000 barrels per day.

Still, the EIA report, "which looks bullish for WTI, will likely be overshadowed by a continuation of the bearish correction the market has been experiencing over the past week", he said.

The benchmark for USA oil had also risen for three straight weeks through Thursday, before the Easter break.

"Oil producers would need to extend the historic agreement to curb global overspply through and until the end of 2017 for oil prices to surge", CNBC reported, citing the bank's report, "amid concerns Russian Federation is lagging behind on its pledged production cuts".

Crude fell in the previous two sessions, but obtained a boost from comments on Wednesday by OPEC's secretary-general that the group was committed to cutting inventories to the five-year average.

Earlier this month, Russia's Deputy Prime Ministers Arkady Dvorkovich acknowledged the effect of the deal sealed with OPEC hadn't delivered as much as Russian authorities expected. Stockpiles of distillate fuel, a category that includes diesel and heating oil, fell a ninth week to the lowest since November. "Geopolitical uncertainty is always a threat to inject premium into the market", said Macaluso.

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