Lunes, 18 Junio, 2018

Oil halts gain as more U.S. rigs counter OPEC-cut deal report

Oil prices rise as Saudi and Russia agree to prolong output curbs Oil Tumbles to Five-Month Low as US Production Builds
Manuel Armenta | 20 May, 2017, 11:00

Crude sank to a five-month low earlier this month, rattled by concern over increasing US crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.

While output curbs that started January 1 are working, global inventories aren't yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said in Beijing alongside his Russian counterpart, Alexander Novak. Nonetheless, "stocks at the end of 2017 might not have fallen to the five-year average, suggesting that much work remains to be done in the second half".

Woods also said that oil supplies would likely remain plentiful despite an extended cut.

Longer cuts at already agreed-upon volumes are needed to reduce global inventories to the five-year average, the energy ministers of the world's biggest crude producers said at a joint press briefing in Beijing yesterday.

Oil traders were surprised by the strong wording of the announcement, though it remained to be seen whether all countries participating in the deal would agree with the Saudi-Russian stance when they meet to decide policy on May 25 in Vienna.

Oil prices snapped a four-day winning streak to settle lower Tuesday as traders were looking for excuses to lock in gains after recent sharp rally.

Crude oil prices surged almost 2.5% to their highest level in two weeks after the world's two biggest producers agreed in principle to extend a deal on output restraint through March of next year.

Brent crude futures, the global benchmark for oil prices, were at $50.86 per barrel at 0125 GMT, little changed from their last close at $50.84.

"I think it will be 3-5 new countries", Novak said. Thus, OPEC countries reduced the average daily production by nearly 1.2 million barrels.

If OPEC fails to reach a deal in May, experts predict another drastic slump in oil prices and some economic problems for the global economy. "Preliminary consultations show that everybody is committed" to the output agreement and no country is willing to quit, said Novak.

Russian Federation and Saudi Arabia said that they will propose to extend the agreement on limiting the extraction of black gold till March of 2018.

If producers maintain their cuts at the current pace, it could push the market into a small deficit by the fourth quarter, said Edward Bell, director of commodity research at Emirates NBD in Dubai.