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Global oil rises on USA inventory draw
20 May 2017, 08:21 | Jan Cross
"We still expect prices to move to $60 over the coming months because the oil market will be in a deficit as supply growth will lag demand growth". Overall production from non-OPEC members, including about a dozen that are party to the multilateral production arrangement, is expected to grow by 600,000 barrels per day this year.
For full coverage of all proceedings in Vienna at OPEC's 172 meeting - log into www.opec.orgfor live webcast from 0900 Central European Time on Thursday 25 May 2017. That led US oil to gains of 5.2% for the week, the biggest since the last week of March.
"The fall in stockpiles undershot the expectation of a 2.36-million draw", said Greg McKenna, chief market strategist at futures brokerage AxiTrader. Iran was the only OPEC member country whose net oil revenues increased in 2016, when its share of total OPECnet oil export revenues increased to 8%.
The consensus among OPEC-watchers is that the organisation is likely to extend its production cuts.
OPEC leader Saudi Arabia has said it wants to see prices above $60 per barrel by the end of the year and promised to do "whatever it takes" to help clear a global glut.
Oil prices jumped after the Saudi Arabian and Russian energy ministers said in a joint statement that an OPEC-led crude production cut would be extended from the middle of this year until March 2018.
The oil bulls were further encouraged by the small drop in the United States domestic crude oil production, which fell 9,000 barrels per day (bpd) to 9.305 million bpd, the first fall in 13 weeks, which ended the longest stretch of gains since 2012.
In November 2014, Opec chose to keep production levels high in the hope it could maintain market share. In fact, the U.S. oil stock now stands at 2,028 million barrels, merely 0.5% lower compared to the inventory levels at the time of the announcement of the OPEC deal. Breakeven level in the sector is now in the range of $43-45 a barrel.
Much of the inventory build-up came as traders started using storage to make easy money on the widening spread between rock-bottom spot oil prices and substantially higher prices for contracts to deliver the oil in future months.
Consensus forecasts were for a draw of around 2.2 million barrels, although markets were braced for a potential build after the American Petroleum Institute (API) data. This however, would not be enough to keep oil prices buoyant given that the U.S. supply taps are open.
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The attack was a reminder that people and businesses should keep their software up to date, or else remain vulnerable, Smith said. And the hackers warned that they would delete all files on infected systems if no payment was received within seven days.