Novak Says Domestic Oil Producers May Speed Up Output Cuts In Feb

Crude Oil Prices Trend Higher for 3rd Session

Crude Oil Prices Trend Higher for 3rd Session

The Organization of the Petroleum Exporting Countries' (OPEC) oil supplies to Asia rose by 7 percent between November and January, to 17 million bpd, meeting two-thirds of the region's oil consumption, data from Thomson Reuters Eikon showed.

"No amount of oil put in storage in the US was enough to dampen the optimism caused by the first estimates of OPEC's January production", brokerage PVM said.

The increased supply is likely to pressure prices of domestic crude, including the benchmark West Texas Intermediate grade, making it more globally competitive, said Afolabi Ogunnaike, Wood Mackenzie's Houston-based senior research analyst for Americas refining and oil product markets. They're not set up to handle the low-sulfur, less dense crude being produced in Texas' Permian Basin and Eagle Ford regions, where most of the USA output growth has occurred.

USA crude stocks grew last week by an unexpected 6.5 million barrels to 494.76 million barrels, the Energy Information Administration said on Wednesday, as refiners let stocks build further in a seasonally slow season for production.

"If the US system can't take the crude it produces, it will have to export it", Macquarie's Dwivedi said.

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The market sentiment is supported by signs of an output cut by producers. The larger-than expected build initially exacerbated concerns that efforts to cut production globally may not be sufficient to reduce a supply glut.

Russian Federation cut production in January by around 100,000 barrels per day (bpd), according to data seen by Reuters. "Crude oil imports were elevated again, as well, with the Gulf Coast seeing a big increase in crude oil inventories".

The curbs follow an agreement a year ago by OPEC and other exporters to reduce supplies by a combined 1.8 million barrels per day (bpd) to prop up prices that remain at about half their mid-2014 levels. That energized bulls to push crude upward, he said.

OPEC has implemented most of its reduction.

A Reuters survey published late on Tuesday showed that OPEC's output fell by over 1 million bpd in January to 32.27 million bpd between December and January.