Oil ends higher following weekly fall in USA crude supplies

A view of the Sharara oilfield in Libya. Pumping from the country’s biggest oil field

A view of the Sharara oilfield in Libya. Pumping from the country’s biggest oil field

On Friday, Baker Hughes said the number of active USA rigs drilling for oil fell 5 to 763 rigs this week the largest weekly fall so far this year and the fourth in six weeks.

"Opec-14 supply is expected to average 32.8 million bpd in August representing a decline of 419,000 bpd as compared to the 2017 high observed in July", Daniel Gerber, CEO of PetroLogistics, said. Nigerian production is back at a 17 month high of 1.8 mbpd while Libyan output has almost tripled from past year with production nearing 1.0 mbpd.

With its revisions, the IEA has cut the demand for oil in the current quarter by 800,000 barrels per day. Previous year at this time, a gallon of regular gasoline cost $2.177 on average in the United States.

"This also makes it unlikely that Libya will be included in the OPEC cut agreement anytime soon", the analysts noted. The efforts have been hindered by rising output from shale fields and countries like Libya, which is exempt from OPEC-led cuts.

However, according to the IEA, OPEC compliance slipped to 75 percent in July, from 77 percent in June.

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Nigeria's crude oil exports are expected to slip to 1.72 million barrels per day (bpd) in October, loading programmes showed on Friday.

"Increased crude oil imports and a drop in the refinery utilization rate open up the possibility of weakness in WTI". Output from major shale fields is also forecast to climb to a record next month. In last 2015, the official production numbers stood at 2.5 million barrels per day. The oil market most likely will have to prepare for another big drop in USA crude supply that will come after the September contract is history.

"If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia", Razaqzada said.

The world remains awash with oil despite a deal struck by some of the world's biggest producers to rein in output.

A market report from Saxo Bank in Denmark said that, before the open of trading in the United States, crude oil looked "directionless" ahead of data releases from the American Petroleum Institute and the U.S. Energy Information Administration.