Watch out OPEC, US could break oil production record of 1970

Watch out OPEC, US could break oil production record of 1970”

In other news, on Thursday, crude oil posted a two-sided trade, first rallying after official USA data showed crude inventories fell sharply last week as refining and exports surged to record highs.

The American summer driving season, which by tradition started on the Memorial Day holiday on Monday, may offer some support for prices, Reuters quoted analysts as saying.

US West Texas Intermediate crude futures dropped 26 US cents, or 0.54 per cent, to US$48.1 per barrel.

Oil regained some ground on Thursday following upbeat data from an industry group that USA crude inventories fell sharply last week.

On Wednesday, a Reuters survey found output from the Organization of the Petroleum Exporting Countries (OPEC) rose in May, the first monthly increase this year, as higher supply from two states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others.

Industry data on USA oil inventories from the American Petroleum Institute (API) late on Wednesday had given prices an initial lift on Thursday morning.

Oilfield services firm Baker Hughes (NYSE:BHI) on Friday reported its weekly count of oil rigs rose by 11 to a total 733.

The US is not participating in the self-imposed production cuts.

"U.S. crude oil exports were a strong contributor to the crude oil stock draw".

There was some positive rhetoric from OPEC Secretary Barkindo with remarks that crude storage in some U.S. hubs had already fallen to the 5-year average and prices edged away from intra-day lows.

Oil prices LCOc1 has gained some ground but an inventory glut and rising supply by outside producers has kept prices below the $60 a barrel that Saudi Arabia wants.

On the possibility for crude prices to remain in 55 to 60 dollars per barrel if the same trend is pursued, the official said decisions are made based on market analysis and conditions though psychological aspects could also play a role.

With Libya's increased output, OPEC's production reached the highest level since October 2014, giving energy traders jitters over the oil production agreement, analysts said.

Further gains may be limited for the two major oil benchmarks as bearish news keeps coming from the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation that are locked in a battle against rising shale production in their efforts to boost prices. The event is likely to lead to increased production from the USA and eventually skew OPEC's price protections.

The Paris Agreement laid out a framework for countries to adopt clean energy and phase out fossil fuels such as oil, coal and natural gas.

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