Production also increase by 56,000 barrels a day to 9.088 million barrels.
Khalid Al-Falih, Saudi Arabia’s energy minister had previously said that the country would not “bear the burden of free riders” indefinitely. Back in November, the Organization of Petroleum Exporting Countries and a number of non-OPEC producers agreed to cutbacks meant to reign in surplus global oil stocks and, in so doing, support the oil price.
In February, Saudi oil production staged a monthly rise of 180,000 bpd, but at 9.98 million bpd, its output remained below its agreed target of 10.06 million bpd and, according to tanker-tracking data, Riyadh is focussing its cutbacks on North America, the IEA said.
USA petrol and distillate inventories drew more than expected, the data also showed.
Overall, increased US oil production continues to counter OPEC rebalancing efforts.
Oil prices on Tuesday surrendered gains since a November OPEC deal to curb output, worsening the slide in a flagship crude oil commodity exchange traded product and sending it to a fresh multimonth low.
Since October, US production has rising by an weekly average of 30,000 b/d.
Investors are nervous because of a surprisingly big jump in U.S. stockpiles reported last week and increased shale production. Instead, it looks like we’re back to every country for itself. Saudi Energy Minister Khalil Al-Falih expressed his irritation last week that Russian Federation isn’t doing its part, and that Saudi cuts would not make room for “free riders” who could profit from higher prices.
Shale producers are ramping up the biggest surge in drilling since 2012, “with the number of oil rigs rising to more than 600 this month, almost double the level of June”. The last 1% down day on the S&P 500 index occurred some 154 days ago on October 11.
Then, they were 48 million barrels higher at just over 3 billion barrels, with Europe stocks rising and the United States levels near a record. If the draw is confirmed by government data on Wednesday, it would be the first drawdown after nine consecutive builds. Hedge funds and speculative investors went long on oil and the price rose. “When you take that pillar away, the support for the 50s is fragile, given where we still are in terms of inventories”. On that basis, we have rarely seen an inventory report more important than the ones coming up.
The increased flexibility of U.S. production has left Riyadh back to where it was in late 2014, and the Saudi leadership will face tough decisions as the six-month agreement draws to a close in June. As traders got surprised by the data, a major sell-off was initiated. A break below could see the market turn its attention to $45/b, the old consolidation low from Q3.
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