NEW YORK (DTN) -- New York Mercantile Exchange oil futures advanced at settlement Tuesday afternoon amid technical support and continued efforts by the Organization of Petroleum Exporting Countries to jawbone the market higher, with oil ministers pointing to enacted production cuts that are working to tighten global supply.
The market now awaits U.S. petroleum inventory reports for the week-ended Jan. 20 due out at 4:30 p.m. EST from the American Petroleum Institute while the Energy Information Administration will issue its report at 10:30 a.m. EST Wednesday. A Schneider Electric survey shows the market expects stock builds of 1.2 million barrels (bbl) each for crude and gasoline while distillate supplies are seen drawn down by 700,000 bbl.
At settlement, NYMEX March West Texas Intermediate futures rose 43 cents to $53.18 bbl. ICE March Brent crude futures gained 21 cents to $55.44 bbl. NYMEX February ULSD futures advanced 1.50 cents to $1.6415 gallon while February RBOB futures eked out a 0.92-cent gain to $1.5759 gallon.
Reuters reported Saudi Arabia crude production at 9.9 million barrels per day (bpd) during the first three weeks of January, down 570,000 bpd from 10.47 million in December, surpassing its pledge to cut 486,000 bpd. The Saudis exported 7.36 million bpd of crude during the first three weeks of January, down 450,000 bpd from December, Reuters reported.
On Nov. 30, OPEC agreed to reduce production 1.2 million bpd during the first six months of this year, while 11 non-OPEC producing countries on Dec. 10 agreed to cut another 558,000 bpd in coordination with OPEC.
The data from Reuters suggests the Saudis are on track to meet a non-binding promise to cut its production by 7% or nearly 700,000 bpd, and supports recent comments from Saudi energy minister Khalid al-Fatih that compliance with the planned output cuts was strong.
Analysts said by making their supply levels semipublic through news reports, the Saudis are putting pressure on other signatories to the supply agreements to ensure full compliance.
OPEC said their production cuts and output reductions from non-OPEC producers that have agreed to lower production total 1.5 million bpd.
Analysts note however that the 1.5 million bpd in implemented production cuts are 258,000 bpd below target. Moreover, they note those cuts could be offset by rising oil shale production by the United States, where output increased to a nine-month high in early January.
George Orwel can be reached at email@example.com
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