Oil prices end at highest level in about three weeks

In a surprise move on Sunday, a joint committee of ministers from OPEC and non-OPEC producing countries chose to examine the possibility of extending production cuts in the second half of 2017. The original deal had a six-month lifespan, with the possibility of an extension.

The production drop in Libya, which was pumping 700,000 bpd before the pipeline halt, is at least temporarily easing concern that rising US supply is offsetting the effect of curbs by OPEC and its allies.

A Reuters survey showed OPEC oil output has fallen for a third straight month in March and members have now complied with 95 percent of their commitments under the deal. But with the deal expiring in June and oil prices retreating recently, discussion also included whether to extend it another six months.

Traders said that rising U.S. drilling activity and oil production were contributing to financial traders reducing their long positions in crude futures to the lowest level since early December.

This increases the very supply glut that OPEC and others had hoped to limit.' data-reactid="21" OPEC and eleven other leading producers agreed late previous year to cut their combined output by nearly 1.8 million barrels per day in the first half of 2017. "The US oil rig count continued its surge".

OPEC is due to meet for its summit in Vienna in May.

A statement on March 26 said a joint committee had requested the OPEC Secretariat to review market conditions and report in April whether the voluntary production cuts should be extended.

It's too early to decide on an extension of the output cuts, and OPEC will take up the issue in May, Barkindo said at Sunday's meeting, during which ministers will monitor compliance with the targeted reductions.

"The market can expect another build on crude (inventories) when EIA release their figures later", said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

Non-OPEC producers led by Russian Federation agreed in December to cut their own output to 558,000 bpd. It also added a sentence saying the ministerial committee "will deliberate before submitting its recommendation to the participating countries".

Oil inventories are high because of low U.S. demand and higher supply, and the market should re-balance in the second half of the year, OPEC secretary-general Mohammad Barkindo told reporters in Kuwait. Inventories in countries in the Organization for Economic Cooperation and Development are now 282 million barrels higher than their five-year average, OPEC Secretary-General Mohammad Barkindo said at the meeting. For prices to climb further, demand has to pick up, Bannister said.

"Unless we have conformity with everybody, we can not go ahead with the extension of the deal", Kuwaiti Oil Minister Essam al-Marzouq said.

  • Zachary Reyes