Published: Tue, May 16, 2017
Money | By Armando Alvarado

Saudi Arabia, Russia agree oil output cuts until 2018

"There has been a marked reduction to the inventories, but we're not where we want to be in reaching the five-year average", Falih reporters in Beijing alongside Novak.

"The agreement needs to be extended as we will not reach the desired inventory level by end of June".

The FTSE 100 rose to an intra-day record high on Monday, as energy stocks were given a boost by a jump in oil prices.

Brent for July settlement added 78 cents to $51.62 a barrel on the London-based ICE Futures Europe exchange.

The extension will initially be on the same volume terms as before, although the ministers said they hoped other producers would join the efforts.

Download the Nigeria Today app from Play store. This has led some market observers to suggest that not only do the OPEC/non-OPEC cuts need be extended beyond their initial six-month duration, but possibly even deepened.

WTI oil prices found support below $47.50 during the USA session on Friday.

All Russian oil companies share the position of the Russian Ministry of Energy to extend the agreement on reducing oil production for another 9 months, Energy Minister Alexander Novak told reporters.

Specifically, Goldman writes that "today's announcement will likely further extend the oil price rebound started last week on decent stock draws and low positioning, although the rally so far today has remained modest compared to the move that occurred previous year when the OPEC cuts were first announced".

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Goldman sees USA crude oil at ~$55/bbl at the end of 2017 and Brent at $57.

OPEC is slated to meet on 25 May and the Saudi-Russia joint statement is expected to ensure cooperation from other producer exporters.

"With the USA rig count increasing for its 17th consecutive week, I think we can safely say that the crude oil battle is well and truly on", said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

With both Saudi Arabia and Russian Federation, the world's two largest producers, behind an extension, the prolonged cuts appear to be a done deal, even before the May 25 meeting.

"The market will also be looking at export cuts and not just production cuts, which is what is required to rebalance the market".

Most European markets opened in positive territory, while Asian markets finished the session mixed. The contracts closed 7 cents and 1 cent higher respectively Friday. Two small producers not involved in the original deal, Egypt and Turkmenistan, have also been invited.

Meanwhile, over in China, oil imports are expected to remain robust as domestic production wanes.

"Furthermore, countries like Iran are still ramping up their production and more importantly, United States shale oil producers are taking the biggest advantage of the current situation by adding more oil to the global supply glut".

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