Published: Fri, May 26, 2017
Worldwide | By Gretchen Simon

OPEC and other nations set to extend output cuts

The cuts are likely to be shared again by a dozen non-members led by top oil producer Russian Federation, which reduced output in tandem with the Organization of the Petroleum Exporting Countries from January.

Miswin Mahesh, an oil analyst at Energy Aspects, told CNBC via telephone that "oil prices are always choppy at this point" when OPEC meetings are happening. Non-OPEC countries led by Russian Federation chipped in with a further 600,000-barrel reduction. With prices above $50 from lows of previous year, they are increasingly moving back into the market.

In London late morning, Brent Crude, the global benchmark, was down 38 cents at $53.58.

"A the firmer oil price will, we expect, further support the USA tight oil industry into 2018". Non-OPEC producers were scheduled to meet OPEC later in the day.

The production cuts initiated last December by some of the world's largest crude producing nations will continue for at least another 9 months.

Algeria's Minister of Energy Noureddine Boutarfa speaks to journalists prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Thursday, May 25, 2017.

Falih said OPEC members Nigeria and Libya would still be excluded from cuts as their output remained curbed by unrest.

OPEC's cuts have helped push oil back above $50 per barrel this year.

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Saudi Oil Minister Khalid al-Falih said Thursday that continuing the cuts at the current level "is a very safe and nearly certain option to do the trick".

Some oil market observers see more declines coming for crude.

The proposed cuts are expected to be shared again by non-OPEC producers during a meeting later in the day.

The group could also send a message to the market that it will seek to curtail its oil exports.

FINSUM: Oil has been a great example of how free market capitalism and competition can bring prices down. It will take us about six months to get there. And U.S. producers are poised to expand more, even if prices tick upward only moderately as a result of the oil-cut extension by OPEC and its partners.

"We are targeting that by the end of the extension period (nine months) we are trying to prep and finalise repairs of our infrastructure and at that time we would be able to join", he said.

He, however, said the nation's oil production was still hovering around 1.5 million bpd, down from around 2.2 million bpd, as a lot of the pipelines affected by militant attacks had yet to be repaired.

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