Investing.com - Oil prices fluctuated between gains and losses again Tuesday morning in Asia, following Saudi Arabia’s decision to cut oil production late last week even as the U.S. continues to increase production.
Crude Oil WTI Futures for April delivery were trading at $62.20 a barrel mid-morning in Asia, up 1.06%. Brent crude futures for April delivery, traded in London, were down 0.40% at $65.41 per barrel.
Partly due to Saudi Arabia’s vow to cut oil production by 100,000 barrels per day (bpd) next month compared to the February level and to cut exports to below 7 million bpd in March, oil prices are stabilizing and inching back up from sharp drops at the beginning of the month. Brent started February at $69.65 and WTI started at $65.80.
Saudi Arabia increased its January production by 23,300 bpd to 9.977 million bpd, according to the latest numbers from the Organization of the Petroleum Exporting Countries (OPEC), released last week. This figure, however, is still below its quota of 10.058 million bpd.
Further supporting prices are rising tensions in the Middle East, especially along the border of Syria and Israel where Iranian and Syrian forces are reportedly amassing with Israeli forces responding. Although neither Syria nor Israel plays much of a role in the oil market, prices tend to increase whenever there is a threat to oil anywhere in the Middle East.
Preventing oil prices from rocketing is the continued increase in production in the U.S.
Now the second-largest producer of oil, ahead of Saudi Arabia, the U.S. has increased its production by more than 20% since mid-2016 to more than 10 million bpd. This puts downward pressure on oil prices while strong global economic fundamentals and Saudi Arabia’s efforts to reduce the global oversupply of oil are preventing big drops in prices.
Meanwhile, demand from China continues to increase, and the International Energy Agency (IEA) has raised its forecast for oil demand this year by 7.7%, expecting global demand to increase by 1.4 million bpd through 2018.