Market Research News

Crude Oil Prices Rise with Hopes of Extension to Oil Production Cuts

  • May 20, 2017
  • By Pete Nisbet
  • 0

Crude oil prices rise amid optimism of an extension to the oil production cuts.  Brent crude futures hit $52.79 at 0630 GMT on Friday, a rise of 0.5%. This is the highest Brent crude price since April 21. US crude oil increased by 0.6% (29c) to $49.64 a barrel – its highest price since April 26.

Crude Oil Prices

Crude Oil Stocks Still High

There are still large stocks of crude to work through, and it is hoped that OPEC and other large producers will continue the current restriction in oil production until at least the end of March 2018. Crude oil prices have varied from under $47 a barrel to over $56. This swing is due to divided opinion over the relative influence of OPEC’s production cuts and the U.S. production increasing.

 

Most observers believe that OPEC, Russia and other large oil producers will maintain the 1.8 million barrels per day (bpd) cut until the end of March next year.

 

The U.S. is not part of this agreement and may continue to increase its crude oil production. Markets are also affected by the current political situation in the U.S., although these tensions have eased slightly over the past few days.

Oil Production Cuts to Continue?

OPEC members will be meeting in Vienna next week (May 25) to determine future policy on crude oil production. The Chief executive of Russia’s largest oil producer, Rosneft, has stated that it will go along with any OPEC decision on oil production cuts. However, the USA will likely continue to increase crude production.

 

Saudi Arabia has been increasing exports by up to 275,000 bpd February and March as oil stocks have risen. Saudi Arabia is the largest oil producer in the OPEC cartel.

Crude Oil Prices – Fluctuation to Continue?

There is still a lack of accord within the oil investment industry. Many are worried that the cuts are not having much effect on stockpiles, while others seem more interested in the drawdowns in American oil stocks over the past few weeks. Thursday’s meeting might settle the situation down a bit.

 

For now, prices may continue to fluctuate and oil futures continue to rise. What is almost certain is that oil production cuts will continue within OPEC and Russia – but out of it? U.S. oil output will likely continue to increase.

About Pete Nisbet

Pete has been working in the field of website design and content for many years. He has a great interest in technology and current affairs, particularly business affairs. Pete's interests are technology, writing and world affairs and he is widely traveled. Pete also holds an Honors BSc from the University of Edinburgh.