Minister: Iraq to boost crude oil production by year’s end

Currently, the members and non-members of the Organization of the Petroleum Exporting Countries (OPEC) are likely looking for 1.8 barrels per day extension of output curb after the recorded 94 percent compliance rate. The economists are looking for consensus of 57.1, down from 57.7 last month.

Oil futures held steady on Monday as a rebound in Libyan oil production over the weekend weighed against upbeat economic data from Asia that pointed to strong energy demand from the region. So far, crude oil prices and broader markets such as the S&P 500 (SPY) (SPX-INDEX) are diverging in 2017.

“The lower end of oil prices will be protected by OPEC’s output-cut decision, whereas the higher end will be capped by expanding US production”, Hong Sung Ki, a commodities analyst at Samsung Futures Inc., said by phone from Seoul.

In the first two months this year, Brazil sold 10.4 million barrels of crude to India, half as much as it shipped to the country during 2016, Brazil’s trade ministry data showed. The fact that we closed higher suggests that there are still plenty of buyers underneath, and that we should continue to go higher over the next several sessions.

“The focus is now to rebalance the market”, he added.

OPEC and powerhouse producers including Russian Federation late last year agreed to pare their output by 1.8 million barrels a day through May, with the aim of reducing global inventories to five-year averages.

That would be bad news for sophisticated refiners, which value heavy grades because the lower cost of such oil results in higher margins, and good news for older, simpler plants that generally need light, sweet crude.

For the upcoming week Stratas Advisors is forecasting that the price of Brent crude will be under pressure with support at $50. The cartel has publicly said the goal of the cutback deal is to bring inventories to five-year averages.

The Caribbean outflows also reflect a change in the relationship between spot and forward oil prices. USA oil rig count has been increasing since June 206 and is now at its highest since September 2015. Consultancy Wood Mackenzie estimates 2017 exports will hit almost 1 million bpd, up from 798,000 bpd previous year.

The softness in stock markets is also weighing on crude, while the weekly USA inventory report Wednesday is expected to show support due to a small stock decline. On the upside though, $55 will remain a strong cap for WTI owing to stubbornness of global inventories and rising United States output.