Non-OPEC producers join OPEC in extending oil output cut: delegates

Non-OPEC producers join OPEC in extending oil output cut: delegates

OPEC and some Non-OPEC oil producers jointly cut the 1.8 million barrel per day output from the beginning of 2017 to July 1, seeking to rebalance the oil market from a production glut.

The move kept global oil stockpiles near record highs, forcing the Opec first to suggest extending cuts by six months, but later proposing to prolong them by nine months, and Russian Federation offering an unusually long duration of 12 months.

It is estimated that the nine-month extension can further increase United States production, which can offset the initiative to rebalance the market.

"We support the extension of production cuts agreement that was agreed upon past year for another six months", Mohammed Al Rumhy, Minister of Oil and Gas said.

The nine-month extension of the cuts - from output levels in October 2016 - was largely expected by the market.

"It's likely we'll be balanced earlier than later", Khalid Al-Falih, Saudi Arabia's oil minister, said at the opening session of the group's meeting in Vienna.

"Everyone is watching (the price of oil) with trepidation, not jubilance", said David Arrington, president of shale oil producer Arrington Oil & Gas in Midland, Texas. Ministers are scheduled to discuss the extension with non-member producers later on Thursday.

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The energy minister of Russian Federation has underlined how global oil producers still have the flexibility to do more to help rebalance markets just hours after OPEC and non-OPEC members agreed to prolong their current agreement.

A preliminary deal among OPEC nations to extend the supply curbs by nine months would be put to representatives of non-OPEC producers later Thursday, an OPEC source said.

US shale producers ramped their production in 2017, "eroding" the benefits of cuts by OPEC, which refuses to slash production even more, he said.

Brent for July settlement slipped 17 USA cents to US$53.79 a barrel on the London-based ICE Futures Europe exchange.

OPEC now accounts for about one third of the world's oil production. Libya and Nigeria, which have boosted output since the curbs started in January, will continue to be exempt from production cuts, he said.

That said, we maintain a neutral stance on the oil price near term and highlight important downside risks from a potentially more hawkish Federal Reserve, which is set to meet in June. It will take us about six months to get there.

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