Business

U.S. crude stockpiles fall unexpectedly

Brent oil extended gains into an eighth straight session on Wednesday, having recovered almost all last month's losses, after Saudi Arabia was said to be pushing its fellow OPEC members and some rivals to prolong supply cuts beyond June.

In post-settlement trade both grades got a boost as industry group the American Petroleum Institute said USA crude inventories has fallen by almost 1.3 million barrels a day, defying expectations that they would increase 87,000 barrels in the week. "Although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the USA, will soon be on the rise again", it said in the report.

Benchmark Brent crude futures LCOc1 slid 24 cents, or 0.4 percent, to $55.62 a barrel in early Asian trade.

World oil production fell in March thanks to a deal to cut output, OPEC said Wednesday, but the cartel's efforts to fight a global glut are threatened by American firms pumping oil with gusto.

On the supply front, the agency said global production fell by 755,000 bpd in March to 95.98 million bpd as OPEC and its partners complied with their joint deal to cut output by 1.8 million bpd in the first half of this year.

According to state media in Russian Federation, the country's oil minister has upped the ante on how much the country will cut out of its production levels through June.

Based on direct communications with Nigeria, OPEC said the country's production levels were still around 1.269 million barrels per day. Total oil consumption in 2017 is expected to stand at 96.32 million barrels per day, according to the report. If confirmed by U.S. Energy Information Administration figures on Wednesday, oil could get another boost.

Oil advanced for an eighth day in London, the longest gain since 2012, on speculation Saudi Arabia will support an extension to OPEC-led output cuts just as stockpiles show signs of shrinking.

Despite the gloomy data, oil investors are holding out hope for short-term good news about a decline in USA stocks.

Last month, Libya's output dropped by almost 9 percent, and production edged lower in the United Arab Emirates, Venezuela, Nigeria, Iran, Angola and other countries. Most members, including Saudi Arabia and Kuwait, are leaning towards this if all producers, including non-OPEC, also agree, OPEC sources told Reuters last month.

Despite this, there are still some concerns that oil markets remain bloated and oversupplied, especially in the United States where both production and inventories are surging.



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