Oil edges up as Saudis cut supplies to U.S., but global glut remains

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Oil edges up as Saudis cut supplies to U.S., but global glut remains

Reuters - 3/24/2017 9:14:40 AM

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Oil prices edged up on Friday, supported by a fall in Saudi exports to the United States, but overall markets remained under pressure on the back of a world market awash with fuel.

Prices for front-month Brent crude futures LCOc1, the international benchmark for oil, were at $50.66 per barrel at 0027 GMT, up 10 cents from their last close.

In the United States, West Texas Intermediate (WTI) crude futures CLc1 were up 12 cents at $47.82 a barrel.

Traders said the slight lift in prices came as a report that Saudi Arabia's crude exports to the United States in March would fall by around 300,000 barrels per day (bpd) from February, in line with OPEC's agreement to reduce supply.

The United States imported about 1.3 million bpd of Saudi oil in February, according to U.S. Energy Information Administration data.

In the United States, overseas oil suppliers like Saudi Arabia have to compete against rising shale drilling, which has pushed up U.S. oil production C-OUT-T-EIA by over 8 percent since mid-2016 to more than 9.1 million bpd.

To other major consumer regions, however, Saudi exports remain high despite an effort led by the Organization of the Petroleum Exporting Countries (OPEC), and supported by other producers including Russia, to cut output by almost 1.8 million bpd during the first half of the year to rein in a global supply glut.

Ship chartering and trading data in Thomson Reuters Eikon shows that OPEC shipments to Asia, the world's biggest and fastest growing oil consuming region, were at 17.6 million bpd in March, up over 5 percent since January, when the cuts officially started, in a sign that OPEC is shielding its main customers from the supply reductions.

Unless OPEC extends the curbs beyond June or makes bigger supply reductions, traders say oil prices are at risk of falling further.

"The market is keen to see further progress on production cuts to alleviate the still growing stockpiles," ANZ bank said on Friday.

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