Oil markets fear rising U.S. production, while OPEC hopes for continuing harmony

Kuwait Oil Minister: No Plan to Exit Oil Cuts

However, worries of dip in revenue by Nigeria could be mitigated by an oil rally that has seen oil prices rise from around $45 a barrel in June to over $70 a barrel this month in part because of the group's agreement to reduce the world's oil production by about 1.8 million barrels a day, or almost 2% of global output.

Russian Federation is among the handful of producers party to OPEC's effort to balance an oversupplied market for crude oil with coordinated cuts in output.

According to the U.S. Energy Information Administration, U.S. crude production rose to 9.75 million barrels per day (bpd), up from 9.49 the previous week.

The week started well with a stronger oil price not seen since the end of 2014 and Brent crude above US$70 a barrel. That could mean the oil market will move from a market deficit to a balanced market this year, and prices could sink to $53 a barrel by the end of the year.

This, energy analysts, believed would see prices rise further in 2018 but the low costs have also been a boost for United States crude oil producers. At the current level of inventories, it will take some time for the USA shale producers to flood the markets and create a similar oil glut in the coming quarters. The cartel expects the oil markets to rebalance by the second half of 2018, taking the oil prices to the $65-$70 per barrel range over the next few months, ceteris paribus (all other things being equal).

In its monthly oil report yesterday, Opec forecast increased oil supply from countries outside the cartel while global demand is set to slow.

Suhail al Mazrouei, UAE's oil minister and Bakheet al Rashid, Kuwait's oil minister also thanked Oman for its efforts to increase cooperation between OPEC and non-OPEC members and for organising the meeting.

Having said that, however, "some digestion of the recent gains should not be alarming, as the rally did overheat slightly at the turn of the year", they said.

Light, sweet crude for February delivery fell 58 cents, or 0.9%, to $63.37 a barrel on the New York Mercantile Exchange, its lowest settle value since January 9. The OPEC quota deal is expected to be in force for most of 2018, but a potentially larger-than-expected reduction in world oil stocks may be revised at the mid-year meeting in Vienna that would slow the pace of price growth.

The country is set for "explosive" growth, with cost discipline learned by the U.S. unconventional oil and gas industry following the price crash of late 2014 paying dividends now, the IEA said.

USA crude inventories fell 6.9 million barrels last week, compared with forecasts for a 3.5 million-barrel draw, the US Energy Information Administration said.

Mr Atkinson revealed the IEA is expecting a "wave of new production" in the coming months. Both countries, however, have agreed to ease production to push up prices.

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