OPEC, in its latest Monthly Oil Market Report, raised its forecast for global crude oil demand to 95.60 million barrels daily, up by 1.16 million bpd from the estimated 2016 average of 94.44 million barrels daily.
In the first week of January, U.S. crude production rose to 8.95 million barrels a day, the highest level since April.
WTI light sweet crude oil was down $1.40, or 2.6 percent, to $51.08/bbl. Of the non-OPEC participants, Russian Federation said it will cut 300,000 b/d.
In a chat with ET Now, Fatih Birol, Executive Director, IEA, says once the oil prices go beyond a certain level, United States shale oil will put downward pressure on the prices once again.
Russian Federation is party to a non-OPEC commitment to curb output and OPEC said production at the tail end of past year was "more or less stagnant".
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OPEC's campaign to prop up oil prices is getting unlikely support from its biggest customer. If the agreement is implemented as it is designed, we will see that the markets will rebalance sometime first half of this year.
In its Monthly Oil Market Report for December, released Wednesday morning, the Organization of the Petroleum Exporting Countries (OPEC) noted that the cartel's price for its reference basket rose to $51.67 a barrel (up almost 20%) last month.
Brent crude, the global oil price benchmark, fell below $53.50 a barrel at one point on Wednesday morning, but was back above $55.60 by 11am this morning. Having said that, this price increase brings some surprises with itself, one of them being U.S. shale oil which was declining a year ago because of the low oil prices. Traders overlooked a report from the U.S. energy regulator showing that crude oil stocks in the country rose by four million barrels last week.
Prices fell on Friday and ended the week 3 percent lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of the world's second-largest oil consumer, China, after it reported the steepest falls in overall exports since 2009. This is mainly driven by the agreement made by OPEC and some non OPEC countries and if this agreement is implemented, the prices will be around these levels for some time to come. Benchmark Brent crude traded at $54.65 a barrel at 10:06 a.m.in London on Wednesday.
Demand for OPEC oil in 2017 will rise compared to 2016 by 0.9 mb/d to 32.1 mb/d.