Russian, OPEC ministers to meet this week on oil output cuts

The price for Brent crude oil fell 2.3 percent to open trading in NY at $53.65 per barrel.

On Tuesday, US benchmark West Texas Intermediate was down 36 cents on the day at $51.43, while Brent North Sea crude had fallen 17 cents to $54.77. “If the agreement contributes to prices rising above $50 per barrel in the coming months, it could encourage a return to supply growth in US… oil more quickly than now expected”.

The reduction was being coordinated with the non-OPEC country Russian Federation, who promised to cut its production by 300,000 barrels per day, Xinhua news agency had reported. Within OPEC, output rose mainly in Angola, Nigeria, Libya, Iran, and Iraq.

The price of the worldwide benchmark known as Brent crude leveled off at just above $55 per barrel Monday-a high not seen in 16 months-after shooting up from around $47 Wednesday, when OPEC agreed to cut its output by 1.2 million barrels per day, or about 4 percent, from its current production of about 33.7 million barrels per day.

Combined, OPEC and non-OPEC producers agreed to reduce output by about 1.8 million bpd, or 2% of the total world output, according to figures cited by Reuters. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. The Stoxx 600 added 0.2 per cent; S&P 500 Index futures were little changed. Royal Dutch Shell (RDSA) edged up 0.5%.

OPEC has stated that all of its major oil producers outside of the group would cut over half a million barrels per day of production on top of its own 1.2million bpd reduction forecast.

“For now, oil markets have bid up oil prices in a fury believing the agreement, which comes into force in January, is exactly what’s needed to balance supply and demand”, said Patrick DeHaan, senior petroleum analyst for GasBuddy, in the release.

Russia’s TASS news agency cited Alexander Novak as saying Tuesday that he will be at the meeting in Vienna.

“Russia is going to be hard to pin down”, said Jim Krane, an energy analyst at Rice University’s Baker Institute. “It’s harder to extract oil in deep Siberian winter”. “Their production is geographically really far-flung”.