Saudi Arabia’s output cut seen helping oil price

OPEC’s largest producer Saudi Arabia has cut output beyond the level agreed at the cartel’s last meeting signaling the kingdom’s resolve to support prices at the current level analysts said Friday.

Oil is holding at around $56 a barrel for the Brent grade.

It has also emerged that both China and India imported more oil last month than was initially thought.

The world’s biggest oil exporter is currently producing at a 22-month low. It had agreed to cut 486kbbl/day to 10.058m bbl a day as part of a global deal to reduce output to curb a supply glut. The caps on production, together with rising demand and natural decreases in output in some countries, will help balance the market and support prices, Al-Falih said in a speech at an energy conference in Abu Dhabi.

Saudi’s deeper than expected cut is serving to counter the rise in US crude stockpiles reported on Wednesday, data which by its very nature is backward looking.

Stronger Brent time spreads are helping support deferred distillate cracks and therefore European refinery margins, which are now at interesting levels for refiner to consider hedging.

Reports say China’s oil imports in 2016 grew at the fastest pace in six years — and the nation was the world’s biggest buyer in December — as the cheapest crude in more than a decade triggered stockpiling and as independent refiners accelerated purchases. Inbound shipments climbed 13.6% last year to 381m MT, the fastest annual pace since 2010, according to data released by the General Administration of Customs on Friday. Imports in December rose to 36.38m MT, or about 8.6m bbl/day.

And from India came report that it imported 13.4% more oil in December than a year earlier, ship tracking data obtained from sources and data compiled by Thomson Reuters Oil Research & Forecasts showed, with Iran’s share of overall imports touching a pre-sanctions level of 12%. India’s oil imports from Iran rose sharply to 546kbbl/day last month from about 181kbbl/day a year ago, the data showed. India, the world’s third-biggest oil consumer, shipped in about 7.4% more oil in 2016 than a year earlier, as processing at Indian Oil Corp’s 300kbbl refinery in eastern
Odisha state rose.