25 July, 2017
Saudi Arabia vowed to cut its August oil exports by almost 1 million barrels per day, the latest move by OPEC to reduce a global oversupply and boost oil prices.
The U.S. West Texas Intermediate crude September contract was at $46.22 a barrel by 7:05AM ET (1105GMT), up 45 cents, or around 1%.
Brent crude oil futures plunged 1.24 dollar or 2.52 percent to close at USD 48.06 a barrel at NYMEX.
"In case some of the obliged nations want to leave the oil cut deal, the prices would plunge", said the official, adding that "they may even deepen the oil cut volume as well".
At the May 2017 OPEC meeting in Vienna, Ibe Kachikwu, minister of state for petroleum resources, had said Nigeria had no problem with joining the production cuts as long as production could stabilise at 1.8 million barrels per day. The increased production in the USA and an increase in the numbers of operating rigs remain as one of the biggest of concerns for the oil bulls.
"The committee may issue a statement on cooperation in production cuts, but output cuts by Libya and Nigeria would be next to impossible considering Libya was just re-emerging from the civil war, for example", said Kaname Gokon, strategist for commodities brokerage Okato Shoji in Japan.
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Combined, the total oil and gas rig count in the United States now stands at 950 rigs, with oil rigs falling by one and gas rigs falling by one.
In January, an OPEC source told Reuters that based on previous compliance agreements, 50 percent to 80 percent compliance would be good.
Rising output from US shale producers has offset the impact of the output curbs, as has climbing production from Libya and Nigeria.
Sharples noted that both Nigeria and Libya have signaled they are not opposed to capping their production at a certain level, over 1 million bpd for both.
Global oil producers, meeting in Russia Monday, called for stricter adherence to their agreement to cut output, with the inclusion of top African producer Nigeria.
OPEC secretary, General Mohammad Barkindo said on Sunday that supply and demand in the oil market was moving in suppliers' favor, but that the rebalancing had been slower than expected.