NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were little changed Monday morning, consolidating last week's gains that pushed the complex to three-week highs as bullish comments by the head of the Organization of the Petroleum Exporting Countries offset a stronger U.S. dollar and a return to service by Libya's main pipeline after a weeklong outage.
At last glance, the May NYMEX WTI futures contract was flat at $50.61 bbl while IntercontinentalExchange June Brent crude futures were little changed at $53.51 bbl. Brent's premium to WTI futures increased 67cts to $2.90 bbl. NYMEX May ULSD futures were fractionally higher at $1.5809 gallon while NYMEX May RBOB futures little changed at $1.7052 gallon.
On Sunday, OPEC Secretary General Mohammad Barkindo expressed cautious optimism that the market was already rebalancing and global oil inventories were starting to come down after three months of output cuts by OPEC and 11-non-OPEC producing countries.
OPEC's compliance rate on its 1.2 million bpd in output cuts has been strong at more than 90% and Russia's data last week showed a compliance rate of 73% on its 300,000 bpd in production cuts. Russia and 10 other non-OPEC producers agreed to cut a total of 558,000 bpd in production.
However, growing U.S. crude oil production has offset some of the nearly 1.8 million bpd in pledged supply cuts that took effect on Jan. 1, with U.S. output up 377,000 bpd at 9.147 million bpd, a nearly 14-month high in 2017. U.S. crude production is expected to continue to expand, with Baker Hughes, Inc. on Friday (3/31) reporting the 11th consecutive weekly increase in the U.S. oil rig count, up 10 last week to a 662 19-month high and 330 higher on the year.
The market has also pointed to higher production rates by OPEC members that are exempt from the production agreement, including Nigeria and Libya.
Mustafa Sanalla, head of Libya's state-owned oil company, said today the nation's oil output is back to 660,000 bpd after oil production at the Sharara oilfield resumed. Libya's production was cut to a 500,000 bpd six-month low on March 27 after a crude pipeline from Sharara to the Zawiya export terminal located west of the capital Tripoli was shut due to militia activity.
In response to offsetting increases in global crude production, Kuwait and other OPEC members have expressed support for an extension of their output cuts after the current scheme expires June 30. OPEC and Russia will meet on May 25 to discuss extending the production cuts for another six months.
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