Martes, 19 Febrero, 2019

Russian Federation says to discuss extending oil cut with OPEC on May 24

Preliminary agreement reached among some OPEC ministers to extend production cuts: Falih Saudi Oil Minister says OPEC/NON-OPEC output cuts could be extended for 3 or 6 months
Manuel Armenta | 25 Abril, 2017, 18:38

Attempting to prevent a further ballooning in supplies, some Opec producers including de-facto leader Saudi Arabia are lobbying to extend the pledge to cut production beyond June.

Major crude-producing countries have reached an initial agreement to extend the output cuts earlier agreed on in December.

"Our decision [in the GCC] was to push for the deal if we see consensus among the others", Mr Al Marzooq said, referring to the 11 non-Opec countries, which include Russian Federation and Oman.

Oil prices ticked higher initially after the comments Thursday from Saudi Arabia's energy minister, but quickly lost steam as analysts said the remark only stirred up more uncertainty.

USA production has jumped nearly 10 percent since mid-2016 to 9.25 million bpd, close to the world's top two producers, Saudi Arabia and Russian Federation.

"Meanwhile, pressure in physical crude is becoming more hard to ignore: timespreads in both Brent and Dubai crude are now both showing the widest contango in several months, while the front end of the Brent contract for difference (CFD) curve has slumped further in recent days". While all four of the biggest oil basins boosted activity this week, the handful of rigs added is the smallest amount of growth in almost two months.

Barkindo said that "March compliance figures are more robust than February figures" and the technical committee meets in Vienna today to discuss the progress of the agreement.

American production has increased about 10% to 9.25 million barrels a day in the past year.

Also supporting the market, exports from OPEC member Iran, which was exempt from the cuts, are set to hit a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers. The group and other nations have failed after three months of curbs to achieve their target of reducing global inventories below the five-year historical average, Saudi Oil Minister Khalid Al-Falih said.

"If they're (OPEC) so busy complying, how come we're taking so much extra inventory?"

Kuwait's energy minister said despite the United States output surge, the maths meant that inventories looked at globally would fall if their output deal holds - "I'm an engineer and I know one plus one equals two".

"We are once again seeing the emerging stalemate between OPEC and non-OPEC cutting efforts on one side and rising USA production on the other", said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.

Oman's Oil and Gas Minister Mohammed bin Hamad al-Ramhi told reporters at the Abu Dhabi forum that a "large" number of producers prefer to extend the agreement to cut outputs in order to raise the cost of petroleum. And prices could very well become even cheaper in the near future.