Proposed Saudi production cut edges up oil price

Oil edged up on Wednesday, lifted by reports of Saudi supply cuts to Asia, but prices were prevented from rising further over a lack of detail of these reductions and because of signs of rising supplies from other producers.

Prices for Brent crude futures, the international benchmark for oil prices, were trading at 53.75 dollars per barrel at 0316 GMT, up 11 cents from their last close.

U.S West Texas Intermediate (WTI) crude oil futures were at 50.97 dollars a barrel, 15 cents above their last settlement. Traders said that the price rises were as a result of reports that Saudi Arabia, the world’s top oil exporter, was telling some Asian customers that it will curb crude supplies slightly from contracted volumes in February.

“Traders continued to fret about rising US supply and compliance by OPEC to agreed-upon production cuts,” ANZ bank said.

The US Energy Information Administration (EIA) said on Tuesday that American crude production in 2017 would rise by 110,000 barrels per day (bpd) to 9 million bpd.

Another concern for traders were high US crude stockpiles, with the EIA scheduled to release its latest figures on Wednesday.

“With inventories at the highest seasonal level in three decades, another increase in this week’s report could see prices come under further pressure,” ANZ said.

Some cuts, however, are happening. In non-OPEC member Russia, which also agreed to cut output.

Extreme cold as low as minus 60 degrees Celsius has helped to knock out production by around 100,000 bpd in the first few days of January.

Many oil engineers expect more reductions as production facilities struggle to cope with the extreme conditions. (Reuters/NAN)