EIA raises USA oil production outlook, cuts oil price forecast

Oil prices rose to five-week highs after Friday's reports of US -ordered airstrikes against Syrian infrastructure, followed by production outages from Libya's largest oilfield, and late-breaking news on Tuesday that suggested Saudi Arabia would support OPEC production cuts.

In post-settlement trade both grades got a boost as industry group the American Petroleum Institute said USA crude inventories has fallen by almost 1.3 million barrels a day, defying expectations that they would increase 87,000 barrels in the week.

The data showed an unexpected drop in overall USA crude inventories, which fell in the week by 2.2 million barrels as imports declined by 717,000 barrels a day.

Crude oil for May delivery slid $0.29 to $53.11 a barrel after reaching a one-month high of $53.76 a barrel in morning trading.

The forecasts come as OPEC countries cut oil output in March more than anticipated.

OPEC and other producers, including Russian Federation, have pledged to cut output by around 1.8 million barrels per day during the first half of 2017 to control oversupply.

The IEA trimmed its oil demand growth forecast for 2017 by 40,000 barrels per day and warned that its revised level of 1.3 million barrels per day "could prove optimistic".

Total oil consumption in 2017 is expected to stand at 96.32 million barrels per day.

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At the same time, EIA estimates that U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ending April 7, or 268,000 barrels per day more than the previous week's average.

After breaking a six-day gaining streak on Wednesday, crude oil prices opened lower on April 13 but regained strength.

Bloomberg reported Saudi Arabia is likely to support extending Opec output cuts into the second half of 2017 in an effort to boost oil prices, according to a person familiar with the kingdom's internal discussions.

Market watchers have long maintained that producers need to extend their production cut if they hope to make a dent in the global inventories.

Despite this output-cut initiative, the oil market remained largely oversupplied due to rising United States production and stockpiles.

Also, the 60- to 70-day lag between exports leaving the Arabian Gulf and arriving in major markets means the extent of OPEC supply cuts has yet to bite.

American drivers jumping into their cars this summer for long-distance journeys are expected to buoy global oil demand, according to the Organisation of Petroleum Exporting Countries.

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