OPEC says global oil glut almost gone as output ticks up slightly

Posted May 15, 2018

Otunuga told Arab News that the price of oil has further room to rise this week.

Prices received a boost last week following President Donald Trump's announcement on May 8 that the USA would withdraw from the Iranian nuclear deal.

Fears of a trade war emerged in April when both sides engaged in a multi-billion dollar tit-for-tat over tariffs.

WTI light sweet oil was up 10 cents at USD70.80 a barrel, staying near last week's 4-year peak.

The West Texas Intermediate for June delivery rose 0.26 US dollar to settle at 70.96 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery rose 1.11 dollars to close at 78.23 dollars a barrel on the London ICE Futures Exchange.

Markets were dampened somewhat by a monthly market report from the Organization of Petroleum Exporting Countries that made few major revisions to its global expectations.

The Brent crude and U.S. oil elevated more than 3%, which hiked the oil prices.

In a report on Monday, OPEC said oil inventories in developed nations in March fell to 9 million barrels above the five-year average.

OPEC economists, however, expressed concern on spending on future projects in the industry. The IMF said it expects the price of oil to be in the $60 range on average through next year, which would represent a 20 percent increase over last year.

But booming output of USA shale producers - eager to cash in on a rally in oil prices since late past year - has proven a headache for combined efforts by both OPEC members and non-members to cut back production to combat a global oil glut.

Improving conditions for shale-derived oil and gas pushed total USA capacity past the 10m bbl/day mark in November last year, with the country expected to account for 1.5m bbl/day of the projected 1.7 m bbl/day supply growth from non-OPEC producers this year.

Nevertheless, it was "evident that uncertainties remain as to the forecast pace of growth of non-OPEC supply for the remainder of the year", the cartel cautioned. This compares to 340 million barrels above the average in January 2017.