Crude oil prices extended positive momentum in Asian trade on Friday, supported by traders’ optimism over the production cuts from OPEC and non-OPEC players. Following a selloff in early Thursday’s trade, oil prices rebounded on reports that OPEC and non-OPEC members may enlarge their output cuts if the global oil glut persists.
U.S. crude oil soared 0.15% from the recent settlement in Asian trade on Friday, while Brent oil price increased 0.25% over the earlier finish.
According to a Reuters report, the supply deal could be extended by May if all major producers showed effective collaboration. Oil prices held their ground in Asian trade on Friday, thanks to prospects for greater cuts from OPEC members.
Although oil depended economies of OPEC and non-OPEC players seek a sustainable growth in prices, the market share war between big producers could stop these players from making further cuts. OPEC players have slashed almost 90% of their agreed output cuts last month, but the impact of reductions is still blurred, as global oil inventories are still standing near record levels.
In addition, the threat of rising U.S. production continues to lower the physiological impact of OPEC’s production cuts. U.S. oil inventories increased over the last six straight weeks to 518.12 million barrels, while gasoline inventories grew 10% since the start of this year.
Almost each U.S. producer announced a double-digit growth in their fiscal 2017 production volumes, supported by their recent cost cuttings, technological improvements and moves towards higher margin assets. For instance, Encana Corporation announced yesterday an oil production growth of 35% for this year. Therefore, higher oil supplies from countries that are excluded from the production cut deal will continue to hinder OPEC’s efforts.