Oil Prices are Seen stabilizing on OPEC-led production Cuts

Oil Prices

Oil prices were steady on early today, because of the OPEC production cuts supporting that market while the U.S. fuel inventories were reaching sky-high that was weighing on crude.

U.S. West Texas Intermediate (WTI) crude futures were trading at $52.08 per barrel which was up by 8 cents from their last settlement. While Brent crude futures, the international benchmark for oil prices, were up 3 cents at $55.66 per barrel.

Both crude futures have traded within a $5 range since the beginning of the year, and traders said that this was because of the competing price drivers.

Despite the stronger U.S. dollar and the still present concerns about the U.S. oil inventories, traders draw their focus back to the effective OPEC production cuts that are currently being implemented.

In 2016, the OPEC and other oil producing countries Russia have agreed to output by almost 1.8 million barrels per day. There was a great amount of skepticism whether producer would actually make the promised cut that was asked for.

 The announced reductions is now estimated to be between 80 to 90 percent as OPEC’s acting leader, Saudi Arabia has enforced sharp production cuts.

Despite this, oil markets remain bloated as inventories especially in the United States are filled to the rim and is still rising pushing up the U.S. drilling activity production as well. Which was resulting to the WTI and Brent crude oil futures plunging 4 to  5 percent below their January peaks.

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