Oil prices rise on expectation of extended crude supply cut

"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.

The declaration carried on the Russian Energy Ministry's website said that the existing deal had had "a significant positive influence" on the market, noting that global inventories of crude had fallen faster than their historical averages in the last five months.

OPEC members agreed in November to cut output by 1.2 million barrels a day, and several non-members, including Russian Federation, agreed in December to contribute a combined 600,000 barrels a day of reductions.

"Today's announcement will likely further extend the oil price rebound started last week on decent stock draws and low positioning", said analysts at Goldman Sachs in a note. Saudi Arabian production in April average 9.97 million barrels per day, nearly 1 percent below its quota under the multilateral deal.

Al Rumhy's counterparts from Iraq and Algeria said Thursday in Baghdad that OPEC and its allies support extending the cuts for another six months.

Crude oil futures inched lower Tuesday, ending a streak four consecutive winning sessions after a warning on the global supply glut.

World oil prices jumped on Monday, with US crude futures trading 3% firmer at more than $49 a barrel.

Earlier this month, Saudi Arabia's oil minister indicated that his country would back an extension to the cap.

While output curbs that started January 1 are working, global inventories aren't yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said in Beijing alongside his Russian counterpart, Alexander Novak. "Therefore, we came to the conclusion that ending will probably be better by the end of first quarter 2018".

USA shale drillers aren't the only ones threatening to offset OPEC's oil production cuts.

It didn't really work, so Opec and a few other producers cut production hoping to revive prices.

The EIA (U.S. Energy Information Administration) estimates that Iraq's crude oil production fell by 5,000 bpd (barrels per day) to 4.4 MMbpd (million barrels per day) in April 2017-compared to March 2017.

"We never say that our goal is a price".

However, last year Saudi officials agreed to the first cut in production for eight years.

"Growth was weaker than expected in the first quarter, however, with notable downward revisions seen in the USA - where demand is essentially flat - and in Germany, Turkey and India", the report said.

  • Neal Todd