Saudi Arabia boosted crude oil production for a second month to the highest level in at least three decades, helping to raise OPEC output as US supply growth showed signs of slowing.
The Middle Eastern country increased daily crude output by 13,700 barrels in April to an average of 10.308 million, according to data the country communicated to the Organisation of Petroleum Exporting Countries' secretariat in Vienna.
Prices collapsed by almost half last year as Saudi Arabia led OPEC in maintaining production rather than cede market share to booming US supply. The group has become more unified about keeping its output target because prices are now rising, according to Kuwait's oil minister. Crude in New York has surged more than 40 per cent from its March low as US drillers pulled a record number of rigs from fields.
"The Saudis must be content that their policy of protecting their market share has worked so well and prices did not stay below US$50 for long," said Christopher Bellew, senior broker at Jefferies International in London. "They held their nerve and now see a stable market with their share preserved."
West Texas Intermediate crude gained US$1.59, or 2.7 per cent, to US$60.84 a barrel at 12:02 p.m. local time on the New York Mercantile Exchange. It hit a 6-year low of US$42.03 on March 18.
Oil prices have recovered "driven partly by the belief that the supply glut may be easing, with higher demand projected ahead of the peak US driving season," OPEC said in its monthly oil market report. The group increased its forecast for daily global oil demand this year by 10,000 barrels to 92.5 million.
OPEC's 12 members will meet in Vienna on June 5 to discuss production levels and market strategy. The group was divided over whether to maintain its output target at its last meeting in November, Kuwaiti Oil Minister Ali Al-Omair said at conference in Doha Tuesday. Rising prices mean members are now more unified in their support for keeping the target, he said.
The oil market is in "excellent" condition, Prince Abdulaziz bin Salman, Saudi Arabia's deputy oil minister, told reporters on April 27.
US shale oil output fell by about 1 per cent this month and the decline will gather momentum in June, the Energy Information Administration said on Monday. Oil drillers cut the number of active rigs to 668 last week, the fewest since September 2010, according to Baker Hughes, an oil-services company. The count has decreased 58 per cent since December.
"The Saudi strategy is succeeding so far given the numerous announcements of capex reductions by oil companies," Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas in London, said by email. "Saudi Arabia is sowing the seeds of the next sustainable price rally, which might not be for another two to three years."
A technical meeting between OPEC and non-member countries in Vienna Tuesday ended without a pledge to cut output, according to three people who attended and asked not to be identified because the event was private. OPEC officials met with representatives from Russia, Brazil, Mexico and Azerbaijan to discuss the oil market, the people said.
OPEC's data compiled from external sources showed Saudi Arabian output of 10.095 million barrels a day in April, lower than the figure directly communicated from the nation. The kingdom's output was 10.069 million barrels a day in March, according to these figures, which OPEC describes as being compiled from "secondary sources." The 12-member group's daily production increased by 18,000 barrels to 30.843 million, the secondary sources data show. Production gains in Iran, Iraq, Nigeria and the United Arab Emirates were offset by a decline of 114,300 barrels a day in Angola.
OPEC maintained projections for supply growth from oil producers outside the group in 2015 at 680,000 barrels a day. It also kept its 2015 estimate for demand for the group's crude at 29.3 million barrels a day. That's about 1.5 million barrels a day less than the group produced in April