Saudi Arabia Cut Crude Exports in January After OPEC Agreement

Saudi Arabia Cut Crude Exports in January After OPEC Agreement

Petroliam Nasional Bhd (Petronas) was more conservative, expecting an average of price of US$45 a barrel.

Josh Stevenson, an analyst who provides market analysis on Lionexo observes that "he fact that there is yet to be a marked "correction" in the supply-demand dynamics of oil made it hard for OPEC's cut to make much of a positive difference in triggering an increase in oil prices".

Oil prices also fell on Monday after reports indicated that OPEC did not cut production as much as originally promised and that USA drilling continued to increase. West Texas Intermediate for April delivery fell 0.74 percent to $48.42 a barrel at 12:08 p.m. on the New York Mercantile Exchange.

A possible extension of OPEC's crude oil production cut deal in 2H17 could support oil prices.

Recent reports showed that oil production from the USA shale producers would increase next month, according to the United States Energy Information Administration (EIA). The supply cuts triggered positive vibes for crude oil and investors were looking forward to booking gains once the output cuts restore a sense of balance to the market.

Beyond OPEC, oil production rose 90,000 bpd in February, as increasing US output offset declines elsewhere.

A source close to the company said it had been requested to increase production in Iraq to 120,000 barrels a day compared to 100,000 barrels a day subject to both parties' agreement. Iraq now outputs about 4.3 million barrels a day. As OPEC's largest producer, the kingdom acts as the group's de facto leader.

But Iraq has lagged behind other Opec members in its efforts to reduce output.

In February, Saudi oil production staged a monthly rise of 180,000 bpd, but at 9.98 million bpd, its output remained below its agreed target of 10.06 million bpd and, according to tanker-tracking data, Riyadh is focussing its cutbacks on North America, the IEA said. If OPEC and non-OPEC investors start to talk seriously about extending the plan to cut output then we could see the start of a short-covering rally.

The Organization of the Petroleum Exporting Countries (OPEC), together with other producers including Russian Federation, has pledged to cut its output by nearly 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for nearly three years.