Saudis see all 'on board' to extend oil cuts

US shale-oil producers have been steadily ramping up production with the Energy Information Administration, forecasting USA output to hit a record of almost 10 million barrels a day in 2018.

Noureddine Boutarfa, energy minister of OPEC member Algeria, said OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the group's existing deal.

He said the new deal would be similar to the current one "with some amendments" without elaborating. OPEC, Pradhan said, should treat Asian markets as primary markets.

The U.S. Strategic Petroleum Reserve (SPR) SPR-STK-T-EIA , the world's largest, holds about 688 million barrels of crude in heavily guarded underground caverns in Louisiana and Texas.

"Although markets widely expect a meeting between OPEC and non-OPEC members on May 25 to conclude with the current output deal extended by another 9 months, it remains a question of how US shale reacts", said Lukman Otunuga, research analyst at FXTM, in a note Monday.

The plan was released just a day after Trump left OPEC's de-facto leader Saudi Arabia following his first overseas state-visit.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so.

"Coming to the India-OPEC dialogue, it is crucial for us as we import about 86% of our crude, 70% of natural gas, 95% of cooking gas from the OPEC countries", he said.

Iraq and Iran were the main stumbling blocks for OPEC in reaching its last output-cutting decision in December. Expectation for an extension of output cut is the main reason for the rally.

"A nine-month extension would normalise OECD inventories by early 2018, in our view, but we see risks for a renewed surplus later next year if OPEC and Russia's production rises to their expanding capacity and shale grows at an unbridled rate", the report said.

"I doubt Iraq will cut any more in the second half than it has already", said Robin Mills, the Dubai-based chief executive officer of consultant Qamar Energy. The price for Brent crude oil, the global benchmark for the price of oil, and West Texas Intermediate, the USA benchmark, were more or less flat at $53.87 per barrel and $51.15 per barrel, respectively.

"Oil prices rebounded last week despite the continuing overhang of growth in U.S. oil production", says Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

A release of U.S. strategic reserves could jolt an already imbalanced oil market and undermine attempts by The Organisation of the Petroleum Exporting Countries (Opec) and other producers, including Russian Federation, to end a persistent glut.

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