Oil rises on US inventory draw as OPEC beckons

Oil rises on US inventory draw as OPEC beckons

Oil rises on US inventory draw as OPEC beckons

Brent reached $52.63 a barrel and WTI rose as high as $49.66 on Monday after Saudi Arabia and Russian Federation agreed on the need to extend output curbs by members of Opec and other producers.

Brent crude settled up 30 cents at $52.51 a barrel, or half a percent.

Market watchers are growing more confident that the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation will extend output cuts of nearly 1.8 million barrels per day (bpd) until the end of March 2018.

US crude imports USOICI=ECI rose last week by 577,000 barrels per day.

Algeria, the African oil producer that played a key role bringing together support for OPEC's output deal previous year, said that most participating nations back a nine-month extension of the cuts.

Unlike many other oil producing nations, the United States does not have the ability to simply dial up or down the country's oil production, meaning the structure of the market is competitive, allowing the USA to capitalize on any OPEC-induced price gains to raise production even more.

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"The majority of the countries support the proposition of Russia and Saudi Arabia", Algerian Energy Minister Nouredine Bouterfa told reporters after meeting his Russian counterpart in Moscow. U.S. light crude slid 26c to $48.40.

Jefferies bank said it was lowering its oil price forecasts due to a surprisingly strong rise in U.S. production.

Even as inventories are drawing down, USA crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day, close to levels from top producers Russian Federation and Saudi Arabia.

Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI rose by 35,000 barrels, EIA said. An extension was due to be discussed at an Opec meeting on May 25.

We assume that OPEC rolls over the November agreement in late May for a further six months at the current level of production restraint. US output "increased again in February by almost 200,000 b/d, and at 9.03 million b/d was the highest since March previous year".

Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, said hedge funds expect the crude glut to recede."Time and again they are rebuilding long positions", he said. All comments are subject to editorial review.

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