Can Opec weather the storm over oil?

United States crude rose more than 5.2% for the week while Brent rose more than 4.7%. An OPEC and non-OPEC committee meets in Russian Federation on July 24 to discuss the impact of the deal.

"The most pronounced inventory reduction in the U.S.in 10 months and the resulting decline in USA crude oil stocks to below the 500 million-barrel mark in the last reporting week have clearly prompted a shift in sentiment", said Carsten Fritsch, analyst at Commerzbank.

Two days after (Thursday), oil prices were higher after evidence of stronger demand balanced reports of higher production by key OPEC exporters in a downbeat report by the International Energy Agency.

For cartel Opec - created in 1960 with the aim of supporting a sustainable price on the oil market - it is in some ways a flawless storm.

He added surging stock markets had added a "feel-good factor" to oil.

Oil prices edged higher on July 14 and were on track for solid weekly gains following positive demand signals, production issues in Nigeria and a reported decline in stocks. OECD stocks are still 266 million barrels above the five-year average, the IEA said.

He said representatives from Libya and Nigeria had been invited to a technical OPEC/non-OPEC committee meeting on July 22 ahead of the ministerial gathering, to give presentations on production from both countries.

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The IEA added that "compliance with agreed non-OPEC output curbs improved to 82 percent in June, overtaking compliance from OPEC for the first time since the cut took effect in January".

OPEC's rebalancing effort has been stymied in part by rising output from Libya and Nigeria, which were exempt from cuts and were producing close to 700,000 bbl/d more than at the time of the initial November OPEC cut agreement, according to US investment bank Jefferies.

Combined, Libya and Nigeria have increased output from 2.048 million bpd in April to 2.585 million bpd in June, and a cap would merely hold steady these levels of production, and would still take away from OPEC/NOPEC production quotas that promised to cut production by 1.8 million bpd.

Crude prices are still around levels in late November last year, when a group of oil producers including Russian Federation and Organization of the Petroleum Exporting Countries (OPEC) pledged to withhold around 1.8 million barrels per day (bpd) of output between January this year and March 2018 to tighten the market.

OPEC said last Wednesday the world would need only 32.2 million bpd of its crude next year, down 60,000 bpd from this year and about 400,000 bpd less than it pumped in June.

"The market is having difficulty picking its head up", said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

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