TODAY.AZ / Business

Crude prices rise in expectation of Aramco supply cut

10 May 2017 [13:17] - TODAY.AZ

By Azernews

By Gunay Camal

Crude prices rose on May 10 after Reuters reported Saudi Arabia would cut supplies to the region as OPEC tries to counter rising U.S. output that is threatening to derail its attempts to end a sustained global crude glut.

Oil was also supported by a larger than expected fall in U.S. crude inventories last week, down 5.8 million barrels compared with analysts' expectations for a 1.8 million barrels decline, according to industry group the American Petroleum Institute. [API/S]

Brent futures LCOc1 were up 19 cents, or 0.4 percent, at $48.92 a barrel at 0612 GMT. They fell 1.2 percent on Tuesday. U.S. WTI crude CLc1 was up 23 cents, or 0.5 percent, at $46.11 a barrel.

The price of OPEC’s basket of 13 crudes stood at $46.83 a barrel on May 9, as compared to $46.87 on May 8.

The State-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of OPEC's agreement to reduce production and as it trims exports to meet rising domestic power demand over summer.

Seven million barrels is roughly two days of oil imports into Japan, the world's fourth biggest importer. Aramco had previously been maintaining supplies to its important Asian customers.

Meanwhile, the benefits of OPEC's agreement to cut output have proved elusive. With less than three weeks to go before the group's next meeting, the oil price is not far off where it was in November, before OPEC and non-OPEC states agreed to cut output.

The oil nations decided late last year on an output cut of 1.8 million barrels per day (bpd) to reduce global oil inventories.

OPEC and other top producers will meet in Vienna on May 25 to discuss the possibility of cuts. Russia also said it was discussing prolonging cuts with other producers beyond 2017.


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