With no breaking news or comment overnight, oil prices were slightly up on Tuesday morning, with recent reports that OPEC is considerably lowering production as per the deal being offset by signs that drilling and production in the U.S. are definitely on the rise.
As of 9:46 AM (EST), WTI Crude traded up 0.78 percent at US$53.16, while Brent Crude was up 0.65 percent at US$55.59.
Ahead of this past Sunday’s meeting of a monitoring committee to decide how compliance to the OPEC-non-OPEC deal would be supervised and assessed, Saudi Arabia’s oil minister Khalid al-Falih said on Friday that around 1.5 million bpd of the agreed upon 1.8 million bpd of oil had already been taken out of the market in January.
Commenting on the OPEC ministers’ comments about the 1.5-million-bpd cut already made, Tamas Varga, senior analyst at London brokerage PVM Oil Associates, said for Reuters:
“Call it a charm offensive or determination to succeed. One thing is certain: the level and the depth of cooperation between OPEC and non-OPEC producers is unprecedented.”
Bernstein Energy has estimated that oil inventories worldwide had dropped by 24 million barrels on the quarter to 5.7 billion barrels in the fourth quarter of 2016, the largest quarterly drop since Q4 in 2013, Reuters quoted the analysts as saying. Related: Why Cheap Natural Gas Is History
However, the OPEC cuts and comments by ministers of countries participating in the global supply-cut deal are not enough to boost oil prices, as rising U.S. drilling and production are placing a lid on the prices.
Last Friday, the number of active oil and gas rigs in the United States increased by 35 for a total of 694 active rigs, according to oilfield services provider Baker Hughes, which was 57 rigs above the rig count a year ago.
The upward trajectory to the number of active oil rigs follows closely that of higher oil prices, particularly for rigs in the Permian basin, which have now reached 281—82 oil and gas rigs more than the same week last year.
The weekly inventory report by the American Petroleum Institute (API) to be released later on Tuesday may give a firmer direction to the oil prices.
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By Tsvetana Paraskova for Oilprice.com
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