Oil Prices Up On Output Cuts

Brent daily chart

The drop in supplies from Iraq comes as the Organization of the Petroleum Exporting Countries, Russia and other producers are cutting output by about 1.8 million bpd until March 2018 in an effort to drain a glut and support prices.

Crude oil is dispensed into a bottle in this illustration photo June 1, 2017.

Brent crude futures, the global benchmark for oil prices, were at $57.84 at 0056 GMT, up 9 cents, or 0.16 percent, from their last close.

Oil fell towards $57 a barrel on Tuesday as crude flows through Iraq's northern pipeline to Ceyhan in Turkey rose further, offsetting an expected fall in U.S. crude inventories.

On the other hand, the US crude also futures were also bullish today with incremental gains tallied at 5 cents at $51.95 per barrel.

"It seems like there's an bad lot of competing drivers ... and crude seems confused", said Stewart Glickman, head of energy research at CFRA Research in NY.

Crude oil prices continued their ascent today as lower exports from Iraq amid the internal conflict with the Kurds gave oil bulls a cause for optimism. At 6:49 EDT, WTI was at US$52.26 a barrel. In the United States, drillers reduced the rig count for a third week to the lowest since June, according to Baker Hughes.

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"We think the fall in shale oil activity is an indication of rising costs, higher break-evens outside of geological sweet-spots, falling initial well productivity and cash-flow constraints at unsustainably low prices", Standard Chartered said in a note.

One more thing to look forward to this week is the decreasing numbers in the USA crude inventories; reports revealed that the inventories have fallen by 2.5 million barrels from just last week.

Meanwhile, oil exports from Iraq's Kurdistan via the Turkish Mediterranean port of Ceyhan have risen slightly to around 255,000 barrels per day (bpd), a shipping source said on Monday.

Oil prices are also recording chart-topping figures last September due to the oil output cut extension.

"However, the turn down in drilling has yet to temper the optimism of most forecasts of USA output growth in 2018".

"I wouldn't be surprised to see WTI going up to $55 a barrel and Brent to $60 a barrel before the beginning of November", he said.

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