The Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, agreed last year to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017. The deal took effect on Jan. 1 and estimates indicate OPEC producers in January achieved 93 percent compliance.
But rising U.S. output helped boost crude and gasoline inventories to record highs last week, amid faltering demand growth for the motor fuel. U.S. commercial crude inventories have found record highs at 518.1 million barrels, which is an increase by 9.5 million from the previous week; gasoline stock piles topped for an all time high, rising by 2.8 million barrels, for a current 259.1 million barrel pile.
Oil market caught between the exuberance of production cuts from OPEC and concerns over rising inventories in the US. To compound things, the oil rig count in the US rose again last week, and at 597, is the highest since October 2015.
"We continue to view the trend of rising inventories and drilling activity in the US as expected consequence of rising prices after OPEC’s production cut agreement. However, it still remains unlikely to negate the impact of the falling output from OPEC, and as such we expected prices to eventually push higher." said Analysts at ANZ
Brent futures were up 23 cents at $56.04 a barrel at 0750 GMT, while U.S. West Texas Intermediate crude was up 19 cents at $53.59. Both contracts earlier fell slightly in quiet trading.
