Oil Prices Rise As Market Awaits Extended OPEC Cuts

Oil Prices Rise As Market Awaits Extended OPEC Cuts”

He also told Reuters that extending cuts to March 2018 aimed to take into account traditionally weak demand at the start of each year.

Oil ministers from OPEC and non-member producers meet on Thursday in Vienna. "With oil stocks nowhere near OPEC's. objective of the recent five-year average level, an extension of cuts seems all but a foregone conclusion", French bank BNP Paribas said.

Asset management firm AB Bernstein said in a May 16 report that OPEC cuts would "lead to accelerated inventory drawdowns in the second half of 2017, but the return to normalized inventories will. drag into 2018".

Meanwhile, oil prices briefly saw a pull back following news early Tuesday of the 2018 US budget proposal, which includes the sale of almost half of the U.S.'s strategic reserves over the course of 10 years. Still, an extension of the existing cuts for nine months appears to be the most likely scenario.

U.S. oil production has jumped by nearly 50 per cent over the past five years, helping to keep prices lower.

Martinez, center, People's Minister of Petroleum from Venezuela leaves the building of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Wednesday, May 24, 2017.

"The inclusion of smaller producing non-OPEC countries such as Turkmenistan, Egypt and the Ivory Coast would be a negligible boost, in our view", Deutsche said.

The West's energy watchdog, the International Energy Agency (IEA), has said oil market rebalancing was on the way and foresaw a significant drop in stock from current record levels of 3 billion barrels in the next few months.

Kuwaiti Oil Minister Essam al-Marzouq said on Tuesday not all OPEC countries and its allies supported a nine-month extension and producers would discuss this week whether to extend output cuts by a six or nine months. "Sounds like everyone is on board there", said Denton Cinquegrana, a chief oil analyst at the Oil Price Information Service.

Oil futures rose slightly on Wednesday, building on a week's of gains ahead of a looming decision on output cuts by major producers and prospects of falling US supplies.

A substantial additional cut was unlikely, one OPEC delegate said, "unless Saudi Arabia initiates it with the biggest contribution and is supported by other Gulf members".

Brent futures rose to $54.28 per barrel by 0602 GMT, up 13 cents from their last close.

"A nine-month extension of the production cuts agreed six months ago is meanwhile regarded as a done deal", Commerzbank said in a note. Russian Federation pledged to cut production by 300,000 barrels daily.

This time next week we will have had time to digest OPEC's discussions and decisions and should have a clearer idea where the market is heading.

To stop this, some analysts, like the oil research team at Goldman Sachs, have suggested that the price curve should be pushed into backwardation, in which future oil prices are below current ones. In 2011, when the Libyan uprising poleaxed crude production there, the United States and other countries opened their reserves to ensure adequate supplies.

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