Opec bets on U.S. petrol demand to drive up summer oil prices

Industry data was said to show US crude supplies fell last week and OPEC's monthly report said worldwide inventories dropped in February.

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.

Distillate stockpiles, which include diesel and heating oil, fell by 2.2 million barrels, versus expectations for a 885,000-barrel drop, the EIA data showed.Refinery crude runs rose by 268,000 barrels per day, EIA data showed.

Saudi Arabia, de-facto leader of the Organization of the Petroleum Exporting Countries, has told other producers that it wants to extend a coordinated production cut beyond the first half of the year, the Wall Street Journal reported.

Brent for June settlement rose 16 cents to $56.39 a barrel on the London-based ICE Futures Europe exchange at 9:05 a.m.in NY.

The U.S. data followed more bullish data from OPEC nations, which said they had cut March oil output beyond the measures they had promised.

The kingdom-OPEC's largest producer-reduced supply below 10 million barrels a day in March, more than pledged under the deal, according to the group's monthly report.

Oil futures have been pinned in a range, supported by production cuts from the Organization of Petroleum Exporting Countries cartel and other producing states but capped by rising USA shale oil production.

The biggest producer in OPEC cut output by 111,000 barrels a day last month to 9.9mn a day, according to the person, who asked not to be identified.

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To comply with the deal, Saudi Arabia has cut production of medium-heavy oil to keep its overall output lower.

But OPEC revised up its estimate of oil supply growth from producers outside the group this year to 580,000 bpd, as higher oil prices following the supply cut help spur a revival in USA shale drilling.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, increased by 0.276 million barrels last week, the EIA said.

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 U.S. shale drillers to pump more, reducing demand for Opec's oil this year.

"OPEC's compliance has been more than anticipated", an OPEC delegate said.

With demand expected to rise by 340,000 bpd in 2018, that will leave increasing amounts of United States oil for exports or to be put into storage.

With the increasing rig count pointing to rising supply, Tony Headrick, energy market analyst at CHS Hedging, said OPEC would be watching.

Market watchers have long maintained that producers need to extend their production cut if they hope to make a dent in the global inventories.

  • Ronnie Bowen