Kuwait Joins Saudis, Russia to Seek Oil-Cuts Extension Into 2018

The price for Brent crude oil, the global benchmark, was around $52 per barrel in early Tuesday trading, up more than 10 percent from last week. Still, an increase in Libyan output, together with a surge in USA production and signs of recovery in Nigeria, may undercut the Organization of Petroleum Exporting Countries' strategy to re-balance the market. Crude oil prices moved below $50 per barrel in late April on signs the designed balance envisioned by production cuts was slow to materialize.

"It looks a little vulnerable, especially if the market starts to think the (inventory) stats aren't going to be that great", Mr. Navy said.

"Rebalancing is essentially here and, in the short term at least, is accelerating", the International Energy Agency said in its monthly report on Tuesday.

"To underscore the determination of oil producers to ensure market stability, predictability and sustainable development - the joint actions of the participating producers should be extended by 9 months, through March 31, 2018", the countries said in a joint statement published Monday by Russia's energy ministry.

Investors also kept a close eye on USA crude stockpile data, which is scheduled for release by the Energy Information Administration Wednesday.

US West Texas Intermediate (WTI) crude futures were at US$49.10 a barrel, up 25 cents, or 0.5 per cent. US crude lost 8 cents to $48.77 a barrel.

"We've come to a conclusion that the agreement needs to be extended", Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said in a statement yesterday.

That is longer than the optional six-month extension specified in the deal, and shows that the battle to reduce overall supply has been more hard than originally anticipated, in part because of rising US production.

Rivkin Securities investment analyst James Woods was quoted by the news agency as saying: "As we have seen over the past six months, rising U.S. production and record inventories have kept upside limited and a nine-month extension at this stage is unlikely to break that".

But with strong production increases in the United States, Brazil and Kazakhstan, the IEA said non-OPEC output would grow by 600,000 bpd this year.

  • Zachary Reyes