Published: Sat, April 22, 2017
Business | By Sandy Mccarthy

EIA raises US oil production outlook, cuts oil price forecast

Net crude oil imports increased by a smaller amount (460,000 b/d), as US crude oil exports rose despite a decline in USA crude oil production.

OPEC and other producers, including Russian Federation, agreed late in November to cut output by around 1.8 million barrels per day in the first half of 2017 to rein in oversupply.

This takes it below a target included in an output reduction deal by OPEC and some non-OPEC producers including Russian Federation which came into force on January 1 for an initial run of six months.

EIA estimates that the price of West Texas Intermediate (WTI) oil was $52.25 per barrel on April 7, $1.71 over last week's price and $12.51 above a year ago. Total non-OPEC supply was forecast at 580,000 bpd, OPEC said. But the oversupply returned by the fourth quarter, when oil producers made 1.1 million barrels a day more than global demand. "We have an interesting second half to come", the agency said in its report.

Compliance among the 11 OPEC members bound by the deal rose to 104 percent in March, as the United Arab Emirates moved closer to its ceiling, Venezuela delivered its full promised reduction, according to the group's monthly report.

That means OPEC has complied 104 percent with the plan, according to a Reuters calculation. "The figures would be even higher if there were no reduction", Novak told Russian Federation media.

For 2017, the IEA said it expects non-OPEC supply to rise by 485,000 bpd, above its previous estimate of 400,000 bpd, led by increases in US production growth.

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But the Organization of the Petroleum Exporting Countries also raised its forecast for supplies from non-member countries in 2017 as higher oil prices encourage USA shale drillers to pump more, reducing demand for Opec's oil this year. In any case, both figures are below Riyadh's OPEC output target.

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"The Saudi Arabian production reduction appears to be ahead of forecast and gave oil a boost", said Jeffrey Halley of futures brokerage Oanda in Singapore.

"However, with all the importance and media attention given to it, shale oil is not a primary source of energy".

"Extending production cuts beyond June is gathering momentum", said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney.

"Ultimately OPEC is viewing it as a point of discussion in terms of whether or not they look to extend cuts", Headrick said.

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