Oil extends gains to sixth day on dip in United States output

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Oil extends gains to sixth day on dip in United States output

The negative sentiment in the oil market lingers with USA stocks increasing and with good news and bad news trading headline places daily.

They cut their forecast for average 2017 Brent crude prices to $50 a barrel from $54 and WTI to $47 from $52.

Bank of America Merrill Lynch lowered its crude oil price forecasts on the back of increasing supplies and a disappointing demand outlook.

Much of that Canadian oil is already pouring into storage tanks in the USA, rattling traders who last week pushed prices to a half-year low.

The global Brent price in the stock market increased to $46.90, up to 2.33 percent at 0400 GMT.

The drop in Baker Hughes' weekly count, coming after a record 23-straight weeks of rising numbers of active rigs, helped stoke sentiment that shale producers may have hit a bottleneck amid prolonged low prices.

The crude oil market will remain volatile over the next 24 months while shale will be a prominent feature over the next few years, according to Maybank Investment Bank Research. Oil rigs in the U.S. have dropped by 0.26 percent, while gas rigs saw a decrease of 0.55 percent. Oil prices in American standard West Texas Intermediate rose by $ 2.28 a barrel to $ 53.78 barrel in morning.

"It would be in the best interest of OPEC to plan on continuing curtailing production after the end of March 2018 so as to maintain the 9 to 10 percent gain in revenues achieved in 2017", he said.

"The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela)".

While private sector data published yesterday showed United States crude reserves fell by 2.7 million barrels previous year - which, if confirmed by U.S. regulatory figures today, would mark the tenth fall in 11 weeks - the oil price is unmoved. Libya, like Nigeria, is exempted from the cuts deal, though its oil production and exports remain vulnerable to disruptions by armed factions and restive workers.

OPEC and other major oil producers such as Russia, Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan, and South Sudan reached an agreement in December 2016 to remove 1.8 million barrels a day from the market.

There were 682.4 million barrels in the strategic oil reserve. Nevertheless, their health hinges very heavily on the trajectory of oil prices, which, for now, doesn't look very encouraging.

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