Saudi Arabia's crude oil exports dropped by about 300,000 barrels per day (bpd) in January, official data showed on Monday, as the top OPEC producer played its part in a global supply-cut pact to support prices and ease a glut.
Saudi energy minister Khalid al-Falih has said the kingdom will adhere strictly to its commitment to cut output and that state oil giant Saudi Aramco was cutting exports. On Nov. 30, the cartel officially announced that its members would cut their production by 1.2 million barrels per day, while non-OPEC members would reduce production by an additional 600,000 barrels per day. So, bullish momentum in the U.S. stock market could partially support oil prices. As reports about the strong compliance rates began to filter out in early 2017, prices moved even higher. Crude oil inventories have risen by ~50 million barrels in the USA so far this year. "They will more likely opt for income and will push to get help from non-OPEC".
Meanwhile, the deal between Opec and non-Opec producers, which was agreed late previous year and aimed to curb production, appears to be having little effect on the glut at the moment, with three of the last four weeks showing substantial inventory increases.
Low demand and rising production could weigh down palm oil prices.
The bigger headwind to prices is also the re-emergence of shale output. While the number of active rigs is still well below the highs of a few years ago, the rig count has already doubled compared to last year's low. "But preliminary data and analyses do not portend such a development, especially because of a significant slowdown in demand growth in China and India - the two major engines of world oil consumption growth". There's some debate about how much of their cost savings come from productivity increases, compared to squeezing suppliers or shutting down in less profitable regions.
OPEC oil producers increasingly favour extending beyond June a pact on reducing crude supply to balance the market, sources within the group said, although Russian Federation and other non-members need to remain part of the initiative. If market balancing indeed has to start, we need to see a sustained drawdown in oil stockpiles.