In 2016, oil cartel Opec and other producers, including Russian Federation, agreed to cut output by nearly 1.8-million barrels per day during the first half of 2017.
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Baker Hughes reported that the US Energy companies continued to add oil rigs for the fifth consecutive week.
U.S. West Texas Intermediate crude oil closed at $53.99, up $0.21 or +0.39%.
According to a recent OPEC report, world oil supply fell by over one million barrels per day in January, averaging at 95.75 million barrels per day.
After a brief profit on Monday, crude oil prices regained strength and rose in the early hours on February 21.
Fawad Razaqzada, Market Analyst at Forex.com, said, of late, oil prices have not really gone anywhere but crucially the pullbacks have been very shallow. Despite investors’ bullishness over the potential growth in prices amid production cuts, the market fundamentals for oil prices appear muted considering the threat of rising USA production. That has traders optimistic the deal, which aims to cut global production by 1.8 million. Russian Federation pledged to cut production by 300,000 barrels daily.
The problem however is that continued production from those producers can actually offset the production cuts from other member nations.
“I am confident that the non-Opec will also raise their level of conformity to bring it at par with Opec”, he said.
But evidence of rising output in the USA has tempered money managers’ appetite to push prices higher.
According to InterContinental Exchange data released on Monday, money managers are holding record levels of long positions in Brent crude derivatives.
After hammering out the output deal with non-OPEC countries in December, Barkindo traveled to the U.S.to kick off a dialogue with the industry and the new administration.
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In remarks on an earlier panel at the conference, however, Shell upstream director Andy Brown said not to expect worldwide oil companies to open the floodgates immediately on E&P spending, even as several majors have begun cautiously to increase their budgets as prices have recovered.
