A deal on extending output cuts by nine months to clear a global stocks overhang and prop up the price of crude seemed closer as the OPEC and non-member oil producers moved closer on Wednesday to clinching such a deal.
A deal in December saw OPEC and 11 non-members agreeing to cut oil output by about 1.8 million barrels per day in the first half of 2017 and the Organization of the Petroleum Exporting Countries meets in Vienna on Thursday to consider whether to prolong that accord.
Since OPEC's de facto leader Saudi Arabia and top non-member Russia said this month they favored such a move, the market sees an extension by nine months as the base-case scenario.
In what would come as a positive surprise for market bulls, Saudi ally Kuwait signaled on Wednesday OPEC could discuss deepening the cuts. But after a key committee recommended keeping the curbs unchanged, hopes quickly faded out.
According to media reports citing OPEC sources, keeping the cuts "at the same level" was recommended by a ministerial committee comprising OPEC members Algeria, Kuwait, Venezuela, current OPEC president Saudi Arabia and non-OPEC producers Russia and Oman.
It had recommended extending the cuts by nine months to March 2018, the committee said in a statement.
When asked whether the committee had agreed on a nine-month extension, Saudi Energy Minister Khalid al-Falih gave the thumbs up.
"Before the end of the year, prices may go above $55 a barrel," Algerian Energy Minister Noureddine Boutarfa said before the committee meeting, saying an extension by nine months should help clear the glut by the year-end.
Speeding up of market rebalancing could be helped and crude prices could be prevented from sliding back below $50 per barrel by extending output curbs by nine months rather than the initially planned six months, Saudi Arabia and Russia have said.
"OPEC has already achieved a lot. They stopped the oil market surplus from building even before they started cutting," said Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts.
Support for extending cuts by nine months have been voiced by most OPEC ministers including Iraq's.
While saying extensions of six or nine months were possible. Zanganeh is due in Vienna later on Wednesday, so far, a low profile has been kept by Iranian Oil Minister Bijan Zanganeh, who clashed with Saudi Arabia in many previous OPEC meetings.
Giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets, OPEC's cuts have helped push oil back above $50 a barrel this year.
Russia and Saudi Arabia were forced to tighten their belts and unrest resulted in some producing countries including Venezuela and Nigeria following oil's earlier price decline, which started in 2014.
One OPEC delegate said that, "unless Saudi Arabia initiates it with the biggest contribution and is supported by other Gulf members", a substantial additional cut was unlikely.
(Source:www.reuters.com)
A deal in December saw OPEC and 11 non-members agreeing to cut oil output by about 1.8 million barrels per day in the first half of 2017 and the Organization of the Petroleum Exporting Countries meets in Vienna on Thursday to consider whether to prolong that accord.
Since OPEC's de facto leader Saudi Arabia and top non-member Russia said this month they favored such a move, the market sees an extension by nine months as the base-case scenario.
In what would come as a positive surprise for market bulls, Saudi ally Kuwait signaled on Wednesday OPEC could discuss deepening the cuts. But after a key committee recommended keeping the curbs unchanged, hopes quickly faded out.
According to media reports citing OPEC sources, keeping the cuts "at the same level" was recommended by a ministerial committee comprising OPEC members Algeria, Kuwait, Venezuela, current OPEC president Saudi Arabia and non-OPEC producers Russia and Oman.
It had recommended extending the cuts by nine months to March 2018, the committee said in a statement.
When asked whether the committee had agreed on a nine-month extension, Saudi Energy Minister Khalid al-Falih gave the thumbs up.
"Before the end of the year, prices may go above $55 a barrel," Algerian Energy Minister Noureddine Boutarfa said before the committee meeting, saying an extension by nine months should help clear the glut by the year-end.
Speeding up of market rebalancing could be helped and crude prices could be prevented from sliding back below $50 per barrel by extending output curbs by nine months rather than the initially planned six months, Saudi Arabia and Russia have said.
"OPEC has already achieved a lot. They stopped the oil market surplus from building even before they started cutting," said Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts.
Support for extending cuts by nine months have been voiced by most OPEC ministers including Iraq's.
While saying extensions of six or nine months were possible. Zanganeh is due in Vienna later on Wednesday, so far, a low profile has been kept by Iranian Oil Minister Bijan Zanganeh, who clashed with Saudi Arabia in many previous OPEC meetings.
Giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets, OPEC's cuts have helped push oil back above $50 a barrel this year.
Russia and Saudi Arabia were forced to tighten their belts and unrest resulted in some producing countries including Venezuela and Nigeria following oil's earlier price decline, which started in 2014.
One OPEC delegate said that, "unless Saudi Arabia initiates it with the biggest contribution and is supported by other Gulf members", a substantial additional cut was unlikely.
(Source:www.reuters.com)
