Oil Price Climbs As OPEC Members Stick To Production Cut

The Organization of the Petroleum Exporting Countries cut its oil output for a second month in February, a Reuters survey found, showing the exporters group has boosted already strong compliance to around 94%. In the last two consecutive months, OPEC producers indicated production compliance above 90%, strengthening future fundamentals for prices.

Kazakhstan over fulfilled its obligations to cut oil output within the deal with other oil producer countries reached in December 2016, Sputnik Kazakhstan news agency quoted Kazakh Energy Minister Kanat Bozumbayev as saying.

In tonnes, oil output reached 42.434 million in February versus 46.992 million in January.

Within the deal with OPEC and non-OPEC oil producers Kazakhstan has committed to cut oil output by 20,000 barrels per day from November 2016 level since January 1 2017. This confirms statements from other OPEC officials, who have suggested that the production cut might need to be extended if a more solid price rise is to be achieved.

Rising output also helps explain the big increase in USA crude exports and the continued high level of domestic crude stocks.

Kuwait pledged to cut production by 131,000 bpd from a baseline of 2.838 million bpd. Earlier this month, for instance, loading data reported by Reuters revealed that exports from Basra, the largest oil export terminal in the country, were to be cut to 3.01 million bpd in March - the lowest daily since last August.


"U.S. storage tanks are being filled with Saudi crude", Jakob said.

Crude oil prices declined in Asian trading on Thursday after the report for an eight straight week of build in US oil stocks, leading USA inventories to stand at the highest level in their history.

Although in the short-term the flood of crude from floating storage will add to supplies coming into Asia, in the longer-term, however, clearing oil out of floating inventories like tankers is part of OPEC's goal to rebalance markets.

The primary reason for this is the relatively short lead time required for USA shale oil production to return to growth based on price signals. While gasoline inventories fell last week, the decline was smaller than expected, exacerbating concerns over a glut that could pressure oil prices.

The market offered little reaction to news of a rise in North Sea crude supply next month.

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