By Gunay Camal
The OPEC wants higher oil prices, but lower market share can complicate its efforts to prop up prices with output curbs.
Oil prices climbed on March 9 due to a strong compliance with touted international production cuts, although a surge in U.S. crude inventories continued to drag.
International Brent crude futures were up 42 cents, or 0.79 percent, at $53.53 per barrel at 0637 GMT. They ended the last session down 5 percent at $53.11 a barrel, hit by a record buildup in U.S. inventories, Reuters reported.
U.S. benchmark West Texas Intermediate (WTI) crude futures gained 32 cents, or 0.64 percent, to $50.6 a barrel. WTI plummeted 5.38 percent to $50.28 per barrel in the previous session, marking its lowest since December.
However, the rise in prices could be short-lived, as lower OPEC market share could complicate whether its members will renegotiate voluntary supply reductions for the second half of 2017.
“While supply from non-OPEC countries in the second quarter of 2017 is expected to be close to its level from the fourth quarter of 2016, OPEC supply is forecast to decline during the same period,” according to the report of the US Energy Information Administration (EIA).
The EIA estimates that the total OPEC crude oil supply will stand at 32.70 million b/d in 2017 and 33.20 million b/d in 2018.
The EIA expects OPEC members to produce 33.02 million b/d of oil in 1Q 2018, 33.30 million b/d in 2Q 2018, 33.29 million b/d in 3Q 2018 and 33.19 million b/d in 4Q 2018.
The OPEC and other oil producers reached an agreement last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017, with investors paying close attention to levels of compliance with the landmark deal.
Kuwait's oil minister said on March 8 that OPEC's compliance with the cuts had exceeded targets, standing at 140 percent in February, while non-OPEC members' compliance was 50-60 percent.
The country is set to host a ministerial meeting on March 26, attended by both OPEC and non-OPEC members to review compliance with the crude production cuts.
Other factors pressuring prices is the strengthening U.S. dollar and rise in U.S. inventories.
The U.S. dollar index rose on the back of stronger-than-expected U.S. jobs data and growing expectations that the Federal Reserve could raise U.S. interest rates next week. A strong dollar makes dollar-denominated oil more expensive for importing countries.
Crude inventories in the United States, the world's top oil consumer, surged last week by 8.2 million barrels.
OPEC's members have agreed to an overall cut of 1.2 million barrels per day. The deal also hinges on non-OPEC countries contributing an additional 600,000 barrels per day worth of cuts, with about half of that coming from Russia.
Overall, global oil prices have surged 15 percent since the cut deal announcement. But, still prices remain far lower than they were back in 2014, before the market crashed.