Azernews.Az

By Nigar Abbasova

Crude futures traded slightly higher on February 20, but the gains were limited as soaring U.S. rigs and record stockpiles block efforts of OPEC and other major producers.

Oil prices rose with Brent futures trading at $55.98 a barrel, 17 cents up and U.S. West Texas Intermediate standing at $53.55, up 15 cents, Reuters reported.

Oil came under pressure after data from Baker Hughes showed that U.S. energy companies added oil rigs for a fifth consecutive week, encouraged by higher prices.

Meanwhile, Goldman Sachs analysts forecasted U.S. oil production to increase in 2017 by an average 130,000 bpd from a year ago.

Market watchers are waiting for crude inventory and production data, which is due to be released on February 23. If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices.

OPEC and other producers, including Russia, agreed last year to cut output almost 1.8 bpd during the first half of 2017. The compliance of the deal participants to production quotas is estimated at around 90 percent. A question mark is now on whether OPEC could extend the pact or apply deeper cuts from July if global crude inventories fail to drop enough.

The data revealed by OPEC on February 13 showed that the group set a record-setting compliance. In January, OPEC production decreased by 890,000 barrels per day (bpd), to average 32.139 million bpd.

Top producer Saudi Arabia made a large cut in its crude output (reduction of 496,200 bpd), accounting for a lion’s share of reductions. The runner up is Iraq, which cut its production by 165,700 bpd. The UAE is also among the contributors with the reduction of 159,300 bpd.

However, output cuts of the giant producers were partially offset by production increases by cut-exempted Nigeria, Libya, and Iran that increased production up by 101,800 bpd, 64,700 bpd and 50,200 bpd respectively. Year-on-year, world oil supply declined by 460,000 bpd, according to the report.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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