Oil prices rise amid decline in production in U.S.

By Azernews

By Sara Israfilbayova

Oil prices rose to a two-week high on June 29, extending a rally into a sixth straight session after a decline in weekly U.S. production eased concerns about deepening oversupply.

The price for August futures of Brent crude oil has increased by 0.42 percent to $47.51 per barrel, meanwhile the price for August futures of West Texas Intermediate (WTI) has grown by 0.45 percent and stood at $44.94 per barrel, Reuters reported.

"After the steep drop in oil prices of recent weeks, I believe that especially hedge funds saw nice buying momentum and lower U.S. crude production was the trigger to act," said Hans van Cleef, senior energy economist at ABN Amro.

Some analysts and traders said the decline was related to temporary factors such as the shutdown of some oil production sites due to Tropical Storm Cindy in the Gulf of Mexico and maintenance in Alaska. Therefore, it is likely that production will recover in the coming weeks, while prices for "black gold" will again decline.

The U.S. Energy Information Administration (EIA) said crude stocks rose 118,000 barrels last week, while weekly production declined 100,000 barrels per day (bpd) to 9.3 million bpd. That was the biggest decline in weekly output since July 2016.

Global oil supplies remain ample despite output cuts by the Organization of the Petroleum Exporting Countries and other producers of 1.8 million bpd since January.

OPEC and other major producers, including Russia, made a deal in December 2016 to remove 1.8 million barrels a day from the market. 

OPEC and its allies, trying to reduce a crude glut, agreed in May to extend the supply cut through March 2018. OPEC has exempted Nigeria and Libya from the curbs due to unrest that has sapped those countries' production.