Oil production cuts begin to take effect in the market, leading to its prices steadying on Tuesday. Oil prices begin to steady after news of oil production cuts and tighter supplies in several regions as the Organization of the Petroleum Exporting Countries encourage members to comply with the agreed production cuts for the first half of the year.
Benchmark Brent crude was 5 cents down, reaching $55.18 per barrel, while crude oil was also up by 5 cents at $52.80 per barrel.
Meanwhile, US oil output was reportedly higher as oil plants in the region are said to perform more constant drilling.
According to a statement by OPEC on Sunday, its members and other producers already removed 1.5 million barrels per day on their production since the deal began on January 1. On the production cut agreement, OPEC members are required to cut 1.8 million barrels per day on their production, while non-members included on the agreement were to shave off 558,000 bpd on their production outputs.
On a statement made by Iraq’s oil minister, most oil companies in the region also started cutting production outputs as a participation on the OPEC deal.
However OPEC’s goal to reduce oil supply in the market in order to raise prices is being counteracted by US oil companies, with recent reports of its increasing inventories, preventing prices from actually reaching the goal price of OPEC.
“The rising oil supply from the United States in coming months is likely to preclude any further increase in oil prices,” an analyst said.
Meanwhile, Bernstein Energy Research Company has released a report stating that during the last quarter of 2016, global oil inventory saw a drastic plunge by 24 million barrels to 5.7 billion barrels.
“This is the biggest quarterly declines since the fourth quarter of 2013, confirming that inventory builds are now reversing as the market shifts from oversupply to undersupply,” a Bernstein analyst noted.
Another contributing factor for the decreasing inventory was the unexpected oil supply surge from the United States oil companies. The oil production in the region has already seen an increase of more than 6% since mid-2016.
So there we have it! Be enlightened with the latest news on online trading, commodities, stocks, technology, and economy. Subscribe now! Trade12 Reviews waits for you. Visit our website here.