Oil edges higher as Opec sticks to supply cuts

Singapore — Oil prices rose on Wednesday after a report of declining crude inventories in the US and as producer cartel Opec seemed to stick to its supply cuts, despite pressure from US President Donald Trump.

US West Texas Intermediate (WTI) crude oil futures were at $56.02 a barrel at 1am GMT, up 52c, or 0.9%, from their last settlement.

International Brent crude futures were at $65.55 a barrel, up 34c, or 0.5% from their last close.

US crude oil inventories fell by 4.2-million barrels in the week to February 22, to 444.3-million barrels, the American Petroleum Institute (API) estimated in a weekly report on Tuesday.

Official data will be released by the US Energy Information Administration (EIA) after 6pm GMT.

Oil markets have generally received support in 2019 from supply curbs by Opec, which together with some non-affiliated producers like Russia, known as Opec-plus, agreed late in 2018 to cut output by 1.2-million barrels a day to prop up prices.

And the group has indicated it will continue to withhold supply despite pressure from Trump this week to stop artificially tightening markets.

“Crude oil has been rising lately, not due to strong growth and rising demand but primarily due to a politically orchestrated cut in production from Opec and friends,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.

Despite this, oil remains in ample supply as US crude oil production has risen by more than 2-million barrels a day over the past year, to a record 12-million barrels a day.

“Opec-plus production cuts have … so far failed to create the tightness needed to support a continued rally,” Hansen said. 

Reuters