OPEC Expects New Oil Production Cuts

Light sweet crude oil (WTI) futures rose 0.55 dollar or 1.02 percent to close at USD 54.33 a barrel at the New York-based commodity exchange NYMEX.

Supply cuts by OPEC and partners in the agreement to reduce global supplies by 1.8 million barrels a day are providing a floor for prices. Weak sentiments on account of rising production and rig counts in the United States will lead to a correction in oil prices.

Mohammed bin Saleh al-Sada told the International Petroleum Week conference that the slump experienced by crude in 2016 had forced the hand of the major oil-producing countries, reports said.

"With non-OPEC poised to grow again, we estimate OPEC will need to increase oil output by just 400,000 bpd on average every year to meet demand through 2022".

On Wednesday, Oil prices were near the multiweek highs after OPEC indicated confidence over its agreement with other oil manufacturers to control productivity to unclutter a superfluity that caused complications in the oil market.

In particular imports of oil from Algeria were up 113 percent from 2015 to 2016, rising to 84,000 barrels per day on average previous year.

"Assuming a gradual recovery in oil prices into a long-term average of $50 to $70 per barrel, we project annual U.S. shale oil growth of 700,000 bpd in 2017-22".

"At the crux of the matter is that 90 percent OPEC compliance is being balanced by ever increasing USA shale production", he added.

Brent futures LCOc1 were up 23 cents at $56.04 a barrel at 0750 GMT, while U.S. West Texas Intermediate crude CLc1 was up 19 cents at $53.59.

The supply cut deal is helping to support oil prices, which at close to US$57 a barrel are up from the low US$30s a year ago, but still-rising USA inventories and expectations the Opec cut will revive United States shale drilling have limited the rally. Russia, a non-OPEC member, also offered to partake, which brought the total supply cut to 1.8 million barrels per day. Below this level, oil supply rationing and rapid EM demand growth should push prices higher.

Market Watch is reporting "Citi sees Brent oil at $70 a barrel by end of 2017".

Money managers hold the highest number of net long Brent and USA crude futures and options on record, data showed on Monday and Friday, betting on higher prices to come as OPEC and other key exporters reduce production.

"Given our unchanged 1.5 million barrels per day growth forecast for 2017, this higher base demand level should fully offset higher USA output". Inventories are expected to significantly drop through 2017, he added.

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