O&G stocks buoyant after Saudi, Russia agree to extend output cuts

Following the Russia-Saudi statement, Kazakh Energy Minister Kanat Bozumbayev said "Kazakhstan should follow the trend", in comments reported by Russia's RIA Novosti agency.

The world's oil stockpiles increased only slightly in the first quarter and are set to decline in the second as demand picks up seasonally and OPEC constrains output, the IEA said Tuesday in its monthly report.

In early December 2016, OPEC countries and eleven non-OPEC nations agreed to slash the total oil production by 1.8 mln barrels per day in the first half of this year in order to cut global oil stocks to the latest five-year average.

Venezuela is undergoing a wave of unrest with protesters angry at an economy in crisis, with food and medicine shortages and soaring inflation. The contract added 98 cents, or 1.9 per cent, to settle at $51.82 a barrel on Monday. Nymex crude oil futures prices are challenging $50 a barrel Monday morning. Oil has surrendered most of its gains since their deal late a year ago. It will need to be confirmed at a meeting of OPEC ministers on May 25th in Vienna.

Brent crude, the worldwide benchmark for crude oil, gained around $1.53 to trade at $52.37 per barrel on the global market.

Putin, Russia's ultimate decision-maker, said he had recently met with the biggest Russian oil firms and they backed a nine-month extension.

But one major unknown will be the response of low-priced USA shale producers, which could undermine the unified effort to prop up the market.

The extension will initially be on the same volume terms as before, although the ministers said they hoped other producers would join in the efforts.

Crude oil inventories in the United States are expected to fall for a sixth straight week, by 2.3 million barrels, according to a Reuters poll of seven analysts ahead of weekly inventory reports from the American Petroleum Institute and the US Energy Information Administration.

The willingness to prolong the cuts, aimed at easing a global glut, is likely to sway other countries to do the same, according to Goldman Sachs Group.

"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.

  • Zachary Reyes