Eleven OPEC countries participating in the oil output reduction deal reduced production in March 2017 by 1.004 mln barrels compared to October 2016, taken as the base level, to 29.761 mln barrels per day, the report said. "We believe that the combination of high OECD inventories, still-weak upstream investment outside the USA and recent oil price weakness will prompt OPEC to extend their production cap through the end of the year", said Rory Johnston, commodity economist at Scotiabank.
On the New York Mercantile Exchange, crude futures for May delivery rose 0.17% to $53.17 a barrel, while on London's Intercontinental Exchange, Brent gained 0.21% to $56.10 a barrel. The EIA's report also showed gasoline inventories have fallen nearly 8 percent since mid-February even as crude oil stockpiles continue to grow.
OPEC's crude production fell last month while the Energy Department reported a surprise drop in US stockpiles. Stocks of gasoline, which had been running above seasonal averages, have dropped for eight consecutive weeks. An insight as to what is causing a spike in demand and some predictions on the what the future holds for shale oil producers. Front-month prices rose 32 cents to $53.40 on Tuesday, the highest close since March 1.
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In a year filled with gloomy news in the oil and gas industry, 2016 saved one of its brightest moments for the end, with OPEC agreeing to a production cut of one million barrels per day on November 30th.
"This demonstrates the willingness of all participating countries to continue their cooperation", OPEC said in a statement last month. There is an overview of current production levels and factors that will impact on future oil demands in the US.
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This means that the combined output of non-OPEC producers, which fell to 57.32 mb/d last year, is now likely to recover to 57.89 mb/d this year, which would represent a rise of 580,000 barrels per day, OPEC said. Prices increased 25 cents, or 0.5 percent, to $56.23 on Tuesday.
Distillate inventories fell by 2.2 million barrels last week but remain in the upper half of the average range for this time of year.
Non-OPEC countries outside the USA and Canada remain a larger but slower-moving factor in future supply.
The eleven Arab countries that comprise the Organization of Arab Petroleum Exporting Countries have combined proved reserves of 710 billion barrels of crude - 55.6 percent of the world's total, OAPEC reported.
"OPEC's compliance has been more than anticipated", an OPEC delegate said.
"Crude oil prices were firmer as oil investors shrugged off rising US supplies and looked forward to the summer driving season", ANZ said in a note.