In the year 2016, the oil prices continued to dip, as the industry was saturated with oversupply. OPEC intervened to recommend regulations on oil production and the major oil producers agreed to cut their supply. The result is favorable now for oil prices that climbed higher. The price of Brent oil is on the ascent for the past five sessions. There is, however, a limitation on the price gain because the US production has not reduced. In fact, US oil production has increased slightly, as the enterprises are looking forward to making profit from the increased demand.
The Brent crude oil gained 0.2% and West Texas Intermediate also gained 0.1%. On Friday, oil prices faced a backlash after the release of the US Energy Information Administration (EIA) data. The US crude inventories went up for the seventh consecutive week. The market is sustained due to the efforts of OPEC members and non-members, who have agreed to cut down the production.
The EIA data revealed that oil stocks in the US increased to 518.7 million in the past week. Despite the increase in oil production, the increase is the lowest in the past few months globally. If this trend continues, OPEC oil production cuts will help the oil prices to increase steadily in the upcoming months. Large producers, such as Saudi Arabia, Iran and others have decided to respect the OPEC deal and the global production is rebalanced, despite the increase in US Shale oil production.