Oil price up on in U.S. petroleum stocks, possible OPEC cut extension

Goldman Sachs' head of commodities Jeff Currie said this week the market is already in a supply deficit. Atkinson said such a move will see the supply deficit become even bigger in the second half of the year. This true on several levels but right now I am simply stating that OPEC does not wield the same level of control over oil markets that it once did. "The answer is absolutely yes because we are going into a deficit market", Currie said at the S&P Global Platts Global Crude Summit in London on Wednesday.

Markets were also relieved when U.S. Commerce Secretary Wilbur Ross signaled the Trump administration would attempt to use existing tools to aggressively enforce trade rules and insist on fairer treatment for U.S. goods, rather than adopt the slash-and-burn approach Trump promoted on the campaign trail in 2016.

Global oil prices recently dipped briefly under $50 dollars per barrel for the first time since OPEC and Russian Federation scaled back output as concerns whether the deal would be renewed and the impact of rising output in the United States weighed on the market.

Bank of America Merrill Lynch said the low oil prices were also due to a slowdown in demand.

Crude inventories in the USA fell 5.2 million barrels in the week through May 5, the Energy Information Administration reported.

"Chief among (the) oil market's worries is that the renewed rise in United States oil production is reducing the speed at which the supply surplus is being eroded", said Fawad Razaqzada, market analyst at Forex.com told Reuters. WTI is now trading at $46.2 per barrel.

Across Europe, the French Cac 40 and German Dax ended the day almost flat, up just 0.05 per cent and 0.07 per cent, respectively.

The decline in global fuel stockpiles will accelerate this quarter, Currie said. Floating storage has started to decline in places like Singapore. This poses an additional nail in OPEC's strategy of cohesion and supply reduction and further complicates the cartels direction on cuts.

Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon. The target is now extended to $38 per barrel. Production from all 13 members slipped by 18,200 barrels a day to 31.73 million last month, with Saudi Arabia continuing to pump below its official target. Nigeria's 200,000 barrel-a-day Forcados oil pipeline is ready to export again after being shut down nearly continuously since February 2016.

The oil price has bounced back above $50 after fears about over-supply sent it plunging last week.

Therefore, OPEC's 100%-plus compliance rate is really by dint of overachievement on the part of others, mainly Saudi Arabia; the kingdom has cut its output by 13 per cent above its current obligation. Independent refiners, which account for about a third of the nation's capacity, have received lower crude import quotas compared with a year earlier, prompting speculation their purchases could slow.