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Crude Oil On Long Win Streal, Near USD47

Crude Oil On Long Win Streal, Near USD47

New data showed the first decline in the number of active USA oil rigs in 24 weeks and fed expectations for further reductions in crude production. Light sweet crude oil (WTI) futures jumped 1.11 dollar or 2.47 percent to close at USD 46.04 a barrel at the New York-based commodity exchange NYMEX. The steady rise in the US rig count kind of bakes in further production increases this year, leaving little time left for inventories to normalize.

OPEC has exempted Nigeria and Libya from the curbs, leaving them free to ramp up output following local unrest, with Libyan oil production nearing 1 million bpd.

"While the trading range is probably lower than we initially thought, we are likely at the bottom end of that range now and at current price levels the asset class looks attractive", the bank's analysts said in their note Thursday.

Taking Dubai oil as a benchmark, prices so far in 2017 are 25 percent above last year's $41 average, while OPEC production in the same time is 2 percent, or 700,000 bpd, below 2016's average, he said.

Front-month NYMEX WTI futures averaged $48.18/barrel in the second quarter, versus $51.82 in Q1.

Omran al-Zwai, a spokesman for Arabian Gulf Oil Company (AGOCO), an NOC subsidiary, said output had been as high as 950,000 bpd in recent days, rising from about 885,000 bpd at the start of last week. At 756 rigs, USA oil rigs have more than doubled from the same time previous year and point to more increases in oil output.

"I think the extent to which Saudi Arabia bled revenue during 2014-2016 forced them back to the OPEC table before the job of really turning the screw on US shale and other non-OPEC supply was completed", said David Fyfe, chief economist at trading firm Gunvor.

Crude oil has touched its highest point since June 19th, marking its consistent rise over six straight sessions.

Opec and its allies, trying to reduce a crude glut, agreed in May to extend the supply cut through March 2018.

"To put that in context, that is almost a quarter of the 1.2 million barrels [per day] OPEC agreed to cut", said Greg McKenna, chief market strategist at AxiTrader, adding that the rise came from Nigeria and Libya, which are exempt from the cuts. Gartman said USA technology will expand to Russia, Mexico, China the Middle East and Africa.

Bank of America Merrill Lynch analysts cut their forecasts on Friday, saying the rise in output from Libya, Nigeria and US shale fields coupled with weaker demand growth, meant the market would be more oversupplied than previously expected.

Weekly data from EIA shows that total USA oil production is comfortably above 9.3 million bpd, the highest since August 2015.

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