Full tanks and tankers: a stubborn oil glut despite OPEC cuts

OPEC net oil revenues in 2016 were the lowest since 2004

OPEC net oil revenues in 2016 were the lowest since 2004

US crude oil inventories fell for a sixth straight week, as OPEC efforts to reduce supply appear to be coming to fruition ahead of the cartel's upcoming meeting next week, while gasoline and distillate stocks also dropped. US crude has gained more than 2% only seven times in 2017.

Not too many people know, but OPEC is so rattled over US shale production that they actually sent a plea to the USA earlier this month asking the U.S.to not pump so much oil.

USA companies that rely on expensive drilling methods have become more efficient, frustrating OPEC's two-year effort to end a crude glut by pumping at maximum capacity to wash out high-cost producers.

Investors "seem to have lost confidence in OPEC's ability to reduce supply in the market", according to Capital Economics.

Elsewhere non-Opec producers Oman and South Sudan have also indicated they would back coordinated cuts led by Opec.

"The battle between bulls and bears is raging on oil", said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

Crude rebounded after Algeria said a nine-month extension to OPEC's production curbs would be backed by most participating countries.

Algerian proposal Algeria, which was instrumental in crafting Opec's historic output deal previous year, has cut production by 55,000 barrels a day, according to Boutarfa, who sees field maintenance in May and June trimming its output by a further 15%.

The Organisation of Petroleum Exporting Countries (Opec) may get its members to agree to continue to tamp down oil production, but it will be a Pyrrhic victory. The country's state oil company Saudi Aramco is set to sign investment deals with several US companies.Iran holds its first round of presidential elections this weekend. These sanctions resulted in roughly 800,000 barrels per day of Iranian production being shut-in between January 2012 and December 2015.

Overall, crude imports from Saudi Arabia rose the highest at 42 per cent to 1.38 million b/d from 970,000 b/d.

Brent for July settlement increased 13 cents to $51.86/bbl on the London-based ICE Futures Europe exchange. Algerian Energy Minister Noureddine Boutarfa said Thursday that most OPEC members support Saudi Arabia and Russia's proposal to prolong the curbs to March next year, and that the rate of compliance should increase. Wednesday's report also showed that United States crude imports climbed 577K barrels per day last week, whereas exports advanced 400K barrels per day.

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