Iraq says achieved OPEC oil cut share, ready to meet new demand

WTI crude futures, on the other hand, rose above the $50 level to reach $50.65 having increased by 0.6% or 32 cents as well. Brent crude LCON7, +0.71%, the global benchmark, rose 34 cents, or 0.6%, to $53.95 a barrel.

All producers agree to extend crude output cuts by nine months to help trim a supply glut, according to Saudi Arabian Minister of Energy and Natural Resources Khalid al-Falih.

The reduction will take the whole nine months of the output cut extension that should be announced next week at OPEC's Vienna meeting, Al-Falih said.

A six or nine-month extension to the present regime is the expected outcome.

Saudi Arabia is the largest contributor among members of the Organization of Petroleum Exporting Countries to an agreement to balance an oversupplied market with managed production declines.

Rising production from non-OPEC and some OPEC countries like Libya and Nigeria not included in the agreement is overwhelming cut backs made by Saudi Arabia, Russia and Middle East producers, all set against a backdrop of lacklustre demand growth as vehicle economy improves mitigating the "benefit" of rising auto sales to demand. "But if the United States market keeps adding 30 rigs a month till then, production is likely to grow by 2.3 million barrels a day, putting a downside price risk on 2018 and 2019". The exact duration of an extension will be discussed in Vienna on May 25, said OPEC Secretary-General Mohammad Barkindo.

Under the deal, Iraq agreed to cut its oil production by 210,000 bpd. There have also been reports of producers considering deepening the production cut.

The Organization of Petroleum Exporting Countries' second-largest producer, which only reluctantly agreed past year to cut output, had previously favored prolonging the supply cuts by just six months.

Oil prices fell on Tuesday after US President Donald Trump proposed the sale of half the country's strategic oil reserves in his budget plan, just as producer club OPEC and its allies are cutting output to tighten the market. United States producers are unlikely to replace all the proposed 1.8m/d cut to global oil supply in 1H17.

Some OPEC members are exempt from output cuts and the US Energy Information Administration (EIA) expects OPEC net oil export revenues to rise in 2017, partly because of "slightly higher" OPEC output.

usa energy companies added oil rigs for an 18th week in a row, the second-longest such streak on record, as higher crude prices motivated drillers to boost monthly shale production to its highest since mid-2015.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so.

Goldman Sachs has already warned of "risks for a renewed surplus later next year if OPEC and Russia's production rises to their expanding capacity and shale grows at an unbridled rate".

  • Zachary Reyes