API Data Mixed, Saudi's Reduce Supply to Asia

API Data Mixed, Saudi's Reduce Supply to Asia

The State-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of OPEC's agreement to reduce production and as it trims exports to meet rising domestic power demand over summer.

Oil prices rose on Thursday, with global benchmark Brent crude trading comfortably above $50 a barrel after a fall in US inventories and a bigger-than-expected cut in Saudi supplies to Asia helped tightened the market.

Crude prices surged back above $47 to settle higher, as investors' jitters concerning rising levels of US oil output eased, after the EIA revealed a bullish inventories report.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.87 per barrel, up 65 cents, or 1.4 percent from the last close.

OPEC is curbing its output by about 1.2 million barrels per day (bpd) from January 1 for six months, the first reduction in eight years, to clear excess supply. Higher output in non-Opec countries, particularly the United States, Canada and Brazil, has offset Opec's deal reached previous year to cut production and kept pressure on oil prices.

Aramco and other producers typically issue monthly notices to refineries and other buyers with contracted supplies outlining their intended allocations to each customer.

Jabber al-Luaibi and Noureddine Boutarfa said the official announcement of the extension will take place at OPEC's May 25 meeting at its headquarters in Vienna, with the Algerian minister adding that "Algeria and Iraq maintain a united stand for the next cuts".

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Brent crude was up 40 cents at $49.50 a barrel by 0930 GMT.

Russian Federation said yesterday it was discussing prolonging cuts with other producers beyond 2017, without giving a clear timeline.

Brent and USA light crude futures contracts closed on Tuesday at their second lowest levels since November 29, the day before OPEC announced it would cut output in the first half of 2017.

Since a low point in May 2016, USA producers have added 387 oil rigs, or about 123 per cent, Goldman Sachs said.

Libya and Nigeria are two OPEC members exempt from the production declines so they can lean on oil revenue to help ensure national security.

If you are a believer of a successful and prolonged extension of the OPEC and non-OPEC output cut pledges, you can definitely invest in regular and leveraged oil or energy exchange-traded products for gains, at least for the short term.

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