Oil prices have started the week trading higher despite indications of increasing US drilling activity and record inventory that largely negated the impact of the OPEC-led output cut.
Brent futures LCOc1 gained 23 cents to touch $56.04 a barrel, while US West Texas Intermediate were trading at $53.59 by improving 19 cents, reported Reuters.
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Baker Hughes reported that the US Energy companies continued to add oil rigs for the fifth consecutive week.
Goldman Sachs was quoted by the news agency as stating in a research note: “Assuming the US oil rig count stays at the current level, we estimate US oil production would increase by 405,000bpd between 4Q17 and 4Q16 across the Permian, Eagle Ford, Bakken and Niobrara shale play.”
This year, US production is expected to rise by 130,000bpd, the research note stated.
OPEC members and other oil exporting countries previously decided to reduce crude output by 1.8 million barrels a day for the first six months of this year.
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By GlobalDataEstimates of the first month reveal that the compliance rate among the group members was around 90%.
OPEC may decide to extend the output-cut deal or induce higher cuts from July if the oil prices fail to revive as expected.
Image: Oil Pumps drilling oil. Photo: courtesy of Dani Simmonds/ FreeImages.com.
