Oil rises on expectation of extended, possibly deepened output cut

Speaking from Riyadh on Sunday, Saudi energy minister Khalid al-Falih said there was unanimous support from all the nations that participated in the earlier deal.

Trump's call for US -held oil sell offs comes as OPEC prepares to meet in Vienna this week to discuss continuing holding crude production down to buoy prices. The producers, who together account for about half the world's oil supply, have seen the initial price boost from their historic agreement fade as shale companies deployed more rigs and raised the country's output to the highest since 2015.

Brent crude settled up $US1.10, or 2.1 per cent, at $US53.61, the highest settlement for the worldwide benchmark since April 18.

The Organization of the Petroleum Exporting Countries, Russia and other producers agreed a year ago to cut production by 1.8 million barrels per day (bpd) for six months starting from Jan 1.

The talks are significant because Iraq, the second largest OPEC producer, has displayed the biggest reluctance to commit to a supply cap. Net revenues for OPEC will actually rise this year to approximately $539 billion compared to last year as per a report by the Energy Information Administration of the United States as a result of not just higher oil prices but also higher output from the member countries.

This is because OPEC's oil supplies in 2017 have so far not actually fallen when compared with a year ago, when oversupply was seen at its worst.

Oil futures settled Friday at their highest level in a month, up more than 5% last week as investors expressed optimism about possible price-supportive outcomes from aThursday night's closely watched OPEC meeting in Vienna.

While inventories held at sea and in producer countries have dropped, they remain stubbornly high in consumer regions, particularly in Asia and the United States.

Preliminary April data indicated stocks would rise further, the IEA said.

Opening up ANWR to oil and gas drilling would raise another $1.8 billion over the next decade, according to Bloomberg's analysis of President Donald Trump's budget plan.

Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected. Iran saw the most substantial rise, earning an extra $15.2 million a day during Q1 while Saudi Arabia, which is shouldering the bulk of the reduction, made an estimated $12.5 million a day more.

His statement comes ahead of an OPEC meeting on Thursday where oil producing members are expected to accept the proposal.

The option of deepening the production cut was also being discussed ahead of a meeting of OPEC and its allies in Vienna on May 25, sources said.

The size of the extra supply cut being mulled by the European Central Bank was not immediately available.

OPEC has been urging other producers to join the supply pact.

  • Zachary Reyes