NEW YORK, April 8 (UPI) -- Production commitments from Saudi Arabia, coupled with a low price prediction from the United States, dealt a blow to crude oil prices Wednesday.
Saudi Oil Minister Ali al-Naimi said at an economic conference in Riyadh late Tuesday he was optimistic oil markets would recover, adding production from the de facto leader of the Organization of Petroleum Countries was steady.
"Oil production in the kingdom is stable and the kingdom's production per day in March amounted to 10.3 million barrels of oil," he said.
An OPEC decision in November to keep production steady increased the downward pressure on oil markets favoring the supply side because of increased output from the United States. U.S. oil production is around 9.3 million bpd.
Brent crude oil prices responded to the Saudi minister's comments by falling 1.7 percent from the previous close to trade at $58.09 per barrel in early Wednesday trading for the May contract.
Brent crude oil prices are up, however, by about 3 percent since the start of the week. A report from the U.S. Energy Information Administration forecast Brent will average about $59 per barrel for the year and gain ground to $75 per barrel by 2016.
If, however, more Iranian crude oil enters a market already oversupplied, EIA said it expects a decline for Brent.
"If and when sanctions are lifted, the baseline forecast for world crude oil prices in 2016 could be reduced $5-$15 per barrel from the level presented [in this month's forecast]," EIA's report said.
Iran and world powers reached a framework agreement that could allay international concerns over the country's nuclear program.
For the United States, EIA said domestic crude oil production could start to slow down in June as the weak market takes its toll on the shale oil sector.
West Texas Intermediate, the U.S. benchmark, fell 2.3 percent in early Wednesday trading to sell for $52.70 per barrel.
