Iraq, Algeria support extension of oil production cuts

Iraq, Algeria support extension of oil production cuts

USA crude stockpiles posted their biggest one-week drawdown since December last week as imports dropped sharply, while inventories of refined products also fell, helping boost oil prices that have been weighed down by concerns about oversupply.

In late November, the Organization of the Petroleum Exporting Countries agreed to cut production by 1.2 million barrels a day, the first such reduction agreement since 2008.

In the United States, U.S. crude stockpiles posted their biggest one-week drawdown since December last week as imports dropped sharply, while inventories of refined products also fell.

The U.S. Energy Information Administration said crude inventories fell 5.2 million barrels last week, much more than the 1.8 million-barrel drop analysts predicted.

Based on the lower USA inventories and the expectation of an extended production cut, this week has the market stabilize, including a recovery of Brent back above $50 per barrel, following steep price falls last week.

While US oil inventories fell, the country's crude oil production continued to rise, jumping above 9.3 million bpd last week, in what is now a more than 10 per cent increase since its mid-2016 trough. At 522.5 million barrels, crude stocks were the lowest since February.

OPEC meets later this month.

Crude prices were modestly higher during the course of the session on Thursday in Asian trading, building an overnight gains, following a much better-than-expected reports on USA inventories. USA light crude oil was $1.81 higher at $47.69 a barrel.

Prices surged after that deal, but have come under pressure in recent weeks as USA production has climbed, undermining OPEC-led efforts to balance supply with demand.

The global oil market is rebalancing very fast, even after last week's selloff, said Jeffrey Currie, who is a head of commodities research at Goldman Sachs Group Inc.

Brent was 69 cents higher, or 1.4 percent, at $50.91 a barrel by 12:07 p.m. EDT (1607 GMT) after hitting a high of $51.16.

On Monday, Saudi Arabia's oil minister Khalid al-Falih said he expected the output deal to be extended to the end of the year or possibly longer.

The Organisation of Petroleum Exporting Countries (OPEC) has called on USA shale oil drillers to cut output for the prosperity of global economy.

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