Oil Holds Advance as Saudis, Russia Favor Output Cut Extension

Output from the politically divided country is at its highest since October 2014 when it pumped 850,000 barrels a day, data compiled by Bloomberg show.

The International Energy Agency said the global oil market is rebalancing and the pace is picking up, even if inventories do not yet reflect the impact of OPEC supply cuts.

Overall sentiment surrounding oil prices has remained firm over the past 24 hours with support from a weaker dollar and expectations that OPEC production cuts will be extended for a further nine months.

A central part of their problem is the USA shale oil business and the competition to the established industry it has come to represent in the past decade.

“The agreement needs to be extended as we will not reach the desired inventory level by end of June”, Saudi Arabia’s Khalid Al-Falih said during the event with Russia’s Alexander Novak. In the process they created more space for shale producers. Prices now are about the same level as when they did the deal.

Then in December, non-OPEC producers led by Russian Federation agreed to cut their own output to 558,000 barrels per day. US stock indexes are pointed toward narrowly mixed openings when the NY day session begins.

Libya is ratcheting up oil output with less than two weeks to go before the world’s biggest exporters decide whether to extend production cuts to clear a supply glut.

As of May 1, Russian Federation moved beyond its commitments as it reduced oil production by 300,790 barrels per day versus October 2016, according to the Energy Ministry. Higher oil prices benefit Middle East oil producers like Iraq National Oil Company and Oman Oil Company.

Goldman said that beyond the ongoing rise in United States oil production, which is up over 10 per cent since mid-2016 to 9.3 million bpd, output will increase by Opec members who were exempt from the cuts, or where supply disruptions had ended, including Libya and Nigeria.

“I feel optimism because our main partner in this process, and our main partner without doubt is Saudi Arabia, has fully implemented all the agreements that took place up to now, and secondly, Saudi Arabia wants to maintain stable and fair prices for oil”, Putin said. If you are an oil producer, you can’t drive up demand, but you can throttle back on output in the hope of pushing up the price of your commodity. They noted the rally has been modest so far, compared with last year’s move when cuts were first announced.