Russia, Saudi Arabia agree to extend oil output cuts until March 2018

Russia, Saudi Arabia agree to extend oil output cuts until March 2018

Russia, Saudi Arabia agree to extend oil output cuts until March 2018

Earlier this month, oil prices hit a five-month high, but have wobbled over fears that producers may be unwilling to hold their nerve and limit production.

Crude oil futures were up Tuesday, with prices headed closer to session highs reached in the prior US session, as expectations that the Organization of the Petroleum Exporting Countries will extend production cuts until early next year continued to boost trading sentiment. USA crude inventories are finally showing some signs of shrinking, falling for the past five weeks from record levels at the end of March.

The country's oil minister said last week Iraq would support a six-month extension.

In its monthly report last week, OPEC said that global markets are still suffering from oversupply and it appealed to other producers, including the USA, to stop pumping so much.

ST PETERSBURG, Russia The main goal of proposed extension of oil output cuts deal is to bring the global commercial oil inventories down to 5-year average and stabilize the market, Russian Energy Minister Alexander Novak said on Tuesday.

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News of the joint deal sent crude prices up more than 1.5 percent in Asian trading. US crude stockpiles probably fell by 2.75 million barrels last week, according to a Bloomberg survey before a government report Wednesday.

"Our view is based on oil prices remaining relatively stable at the US$50 per barrel levels in 2017, enough for oil majors to restart their capex plans, considering the lower cost of production and better efficiencies in the sector". However, the report warned even if supply cuts are extended at OPEC's May 25 meeting, "much work remains to be done in the second half of 2017" in order to drain stocks closer to its benchmark five-year average.

The Energy Ministers of Saudi Arabia and Russian Federation said that they had "reached an understanding" that it is necessary to keep surplus crude off the market "until March 31, 2018", in order to stabilize a world oil market that is still oversupplied.

The deliberations come as two OPEC members exempt from the cuts boost output. "Get prepared for real sacrifices or we will have to say goodbye to the deal", he said.

Kuwait, a Gulf producer usually aligned with the Saudi Opec view, said on Tuesday it supported the proposal. United States oil output has jumped by more than 10 per cent since mid-2016 to over 9.3 million bpd.

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