Nigeria to Restore Oil Output Even as OPEC Weighs Extending Cuts

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In its closely watched monthly oil market report, the IEA said global oil stocks will decline this year if Opec maintains its production cuts with allies like Russian Federation beyond May, potentially supporting prices after the near three-year-long slump.

The Paris-based agency said preliminary data showed oil stocks across industrialised nations fell by 17.2 million barrels in March, resulting in an increase of 38.5 million barrels, or 425,000 barrels per day (bpd), in the first three months of the year.

Oil prices have stabilised in recent weeks and could be boosted further if the cartel made a decision to extend its output reductions beyond the summer, the Paris-based agency said.

Meanwhile, the IEA said the "market is already very close to balance".

Oil prices were little changed in modest volume on Thursday, during a week in which crude benchmarks recouped more of March's losses on increased hopes world supply and demand were nearing balance.

At the end of November, the Organization of Petroleum Exporting Countries (OPEC) agreed to cut output by 1.2 million barrels per day (mb/d) from January 1, initially for a period of six months. This would provide further support to prices, which in turn would offer further encouragement to the USA shale oil sector and other producers.

Still, data showed an unexpected drop in overall USA crude inventories, which fell last week by 2.2 million barrels as imports declined by 717,000 barrels a day.

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OECD stocks "drew moderately" in February and the IEA anticipates they will dip down further in March.

The IEA also warned global energy demand growth could weak this year as Russia, India, Korea, the United States and some Middle Eastern countries slow.

Commodities analysts at Commerzbank said the question was now "whether the OPEC production cuts really have translated into a reduction in supplies".

"We have an interesting second half to come", it said.

The IEA said it raised its second-quarter demand forecast but cut for the second half of the year.

Oil prices are still around 25 per cent higher than they were a year ago, and roughly stable over the past three months, despite frequent day-to-day volatility.

Brent crude traded at around $55.83 a barrel on Thursday shortly after the European open, down 0.04 percent, while US crude was around $53.05 a barrel, down 0.11 percent.