With glut nearly gone, OPEC still cuts more than oil pact demands

With glut nearly gone, OPEC still cuts more than oil pact demands

A global oil glut has been virtually eliminated, according to Opec figures, thanks in part to an Opec-led supply cut deal in place since January 2017 and fast-rising global demand.

USA production has soared to 10.7 million barrels a day, according to preliminary weekly data from the Energy Information Administration.

OPEC and 10 producers outside the cartel, including Russia-currently the world's largest crude producer-have been holding back crude output by around 1.8 million barrels a day since the start of previous year.

Oil and gas analyst for Hydrocarbon Capital Malcolm Graham-Wood predicts that about 1m barrels of oil will go off the market following the decision, reducing the supply of oil which was tight from before. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year. OPEC expects non-OPEC supply to expand by 1.72 million bpd this year, which is higher than the growth in global demand.

The country produced 3.813 million barrels per day of crude oil in March, the report read.

The higher crude prices that have followed have prompted growth in rival supply and a flood of USA shale output.

But OPEC forecast headwinds to future growth, such as the slow place of oil industry investment and an expected dip next year in investment in US shale, also known as tight oil.

USA drillers added 10 oil rigs in the week to May 11, bringing the total to 844, the highest level since March 2015, energy services firm Baker Hughes said on Friday.

"Germany has said it will protect its companies from US sanctions, Iran has said French oil giant Total has yet to pull out of its fields and all the while it seems the Chinese are ready to fill the void created by the U.S". OPEC has not yet signalled what this may mean for its supply cut accord, but stated that it "stands ready to support oil market stability".

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