However, lasting price movements could be limited over the next year because some USA tight oil producers have used financial instruments to guarantee a price above $50/b for their expected production.
"Nigeria is beginning to recover from the difficulties it had as a result of the loss in oil production".More news: Xi, Modi unlikely to meet at G20 due to border row
"In the past few months, Libya and Nigeria have seen their combined output increase by more than 700,000 barrels per day".
When OPEC's technical committee meets in St. Petersburg at the end of July to evaluate compliance with the production cut deal, the big question will be what to do about Libya and Nigeria. However, the initiative ultimately failed when Iraq, OPEC's No. 2 oil producer, began selling its heavy crude to American buyers as a substitute for Saudi Arabian grades.
In its closely watched monthly oil market report, the IEA said it now expects global demand to rise by 1.5% this year to 98 million barrels a day, driven in part by rising consumption in Germany and the US during the second quarter. The IEA raised estimates for global oil demand growth in 2017 by about 100,000 bpd to 1.4 MMbpd, the strongest in two years. USA shale production continues to rise; inventories remain elevated; and the markets are concerned that the OPEC cuts are not doing enough to drain the surplus.More news: Stanton to defend, Judge hopes to rule Home Run Derby
Oil futures rose, maintaining some gains from earlier in the day, as a report showing hefty drawdowns in USA crude inventories was offset by data pointing to lackluster gasoline demand. That's more than what most OPEC members export. "Further growth of 1.4 mb/d is foreseen for 2018, with global demand reaching 99.4 mb/d". The U.S. Energy Information Administration contributed to the encouraging outlook by reducing its production forecasts for 2018 to a production increase of 570,000 barrels per day, down from June's forecast of 680,000 barrels per day.
A coalition of 24 OPEC and non-OPEC countries including Russian Federation have been throttling their output since January to prop up prices. The initial price boost from the agreement on the cutbacks past year also encouraged more output from shale-oil drillers in the USA, further diluting OPEC's efforts. Production from those two countries, in particular, has surged in recent months, undermining the attempted cutbacks and helping to derail widespread predictions of a rally. The EIA report showed inventories fell by 1.6 million barrels, compared with analyst' expectations for a 1.1 million barrel gain. We would continue to monitor the level of compliance with the deal.More news: Buffalo Bills DL Adolphus Washington arrested on weapons charge over weekend