london – Crude oil prices inched higher yesterday as investors reacted to the news that Saudi Arabia reduced exports to the United States. Overall, however, gains appeared to be limited by the global supply glut.
June Brent crude futures, the international benchmark for oil, were trading $50.68, up $0.02 or +0.04 per cent in early yesterday. US May West Texas Intermediate crude oil futures were trading at $47.80, up $0.09 or +0.19 per cent.
According to reports, prices were underpinned by a report that Saudi Arabia’s crude exports to the United States in March would fall by around 300,000 barrels per day (bpd) from February, in line with OPEC’s agreement to reduce supply. Saudi exports remain high to other major consumer regions despite an effort by OPEC to curb output. So far this year, the cartel and other producers including Russia have cut supply by 1.8 million barrels per day during the first half of the year in an effort to trim global supply.
The move by the Saudis may be a weak attempt to spike prices higher. However, it shouldn’t be enough to start a rally since US production continues to overwhelm any attempts by OPEC and non-OPEC countries to control supply and stabilise prices.
Overseas oil suppliers like Saudi Arabia are currently competing against a major effort by US producers to increase shale drilling that has driven up US oil production by more than 8 per cent since mid-2016 to just above 9.1 million bpd. Unless OPEC and other non-OPEC producers decide to extend production curbs beyond June or slash producer even more, prices are likely to continue to drift lower.