Malaysia pledges to cut oil production by 20000 barrels per day

Malaysia pledges to cut oil production by 20000 barrels per day

"As expected following comments ahead of the meeting on behalf of Saudi Arabia and Russia, OPEC members have agreed to prolong the existing production curtailment (a cut of 1.8m bbl/d including Russia's cuts) to the first quarter of 2018".

Making the long oil trade all the more hard is that high USA oil inventories mute the impact of output reductions by OPEC and other countries, indicating that oil bulls need to focus on other factors. The term of the agreement will be valid for 9 months, starting from the second half of 2017. However, the extent of production cut is retained at 1.8 billion barrels per day.

Hamid stated that only decisive action from OPEC will boost prices from current levels, which is constantly facing the challenges of increasing U.S. shale output.

"Malaysia welcomes the decision agreed today and reaffirms its commitments to today's agreement and wishes the cooperation to be successful", he added.

The US, which is the world's largest oil consumer, has also stayed out and instead become a strong competitor for the OPEC.

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Oil prices had earlier fallen by more than 50 per cent in less than two years, from levels of over $120 a barrel. With the increase in the prices and production of the shell gas things have become hard for the oil producers, as their efforts to maintain the balance gets slower after this activity.

Investors seemed to focus on that reality on Thursday, when they pushed the price of crude to levels seen before OPEC's meeting in November. The global benchmark crude traded at a premium of $2.52 to WTI.

U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $49.80 a barrel, gaining 90 cents or 1.8 percent, after hitting an intra-day low at $48.18.

During the meeting, Khalid al-Falih reportedly said, while the oil market is on its way to recovery, "more time is needed" before oil supplies can be expected to return to their five-year average. Producers in the USA raised output by more than 10 percent since mid-2016 to over 9.3 million bpd to take advantage of higher prices and the supply gap left by OPEC and its allies.

Crude prices tumbled 5 percent following the decision on Thursday and extended losses on Friday. Indeed, any effort by the group to support prices through production cuts runs the risk of being undermined by a surge in U.S. shale production.

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