Oil prices steadied on Tuesday after news of lower crude supplies from Saudi Arabia offset higher production from other large exporters including the United States.
Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), an industry source familiar with the matter told Reuters on Tuesday.
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The cut is in line with the kingdom’s commitments in a supply reduction pact led by the Organization of Petroleum exporting Countries designed to bolster oil prices that have been depressed for more than three years by a global glut.
But oil production remains high in many parts of the world and prices are still around half the level seen in 2011-2014.
Benchmark Brent crude was up 5 cents at $52.42 a barrel by 0745 GMT. U.S. light crude was 10 cents higher at $49.49.
“Support is coming from a stabilising U.S. rig count, falling U.S. inventories and the Saudi cut in exports,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, told the Reuters Global Oil Forum.
“But against this we still have robust production growth from the United States, Libya and Nigeria.”
Production from Libya’s 270,000 bpd Sharara field is returning to normal after a disruption when protesters broke into a control room, the National Oil Corp said.
OPEC member Libya is exempt from limits on its production and a recovery of the North African country’s output has complicated OPEC’s efforts to curb supply, fuelling doubts over the effectiveness of the agreed cuts. Libya pumped 1.03 million bpd in July, according to the latest Reuters survey.
OPEC output hit a 2017-high in July and its exports were at record levels.
Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi on Tuesday to discuss ways to increase compliance with the deal to cut 1.8 million bpd in production.
The U.S. Energy Information Administration, part of the Energy Department, will release its weekly petroleum status report at 1430 GMT on Wednesday, giving details on stockpiles and refinery runs.
U.S. crude inventories were expected to have posted their sixth straight weekly decline last week, while refined product stockpiles probably fell too, a preliminary Reuters poll showed on Monday.
Oil output in the United States has risen this year, although Baker Hughes data on Friday showed a cut of one drilling rig in the week to Aug. 4. (Reuters)