Oil prices rise on hopes that exporters may extend output cut deal

However, last year's historic production cut also included a contribution from the Russians, who produce just under 11 million bpd, and sundry other non-OPEC players.

WTI futures for July delivery, the new US pricing benchmark, were marked 0.1% lower from their Monday close at $50.60 while Brent crude contracts for the same month were seen 0.05% lower at $53.38 per barrel.

On Monday, share prices took a dive, though, after the news that Iraq was resistant to longer extensions, but returned to pre-market levels when Saudi energy minister, Khalid al-Falih, flew to Iraq to gain its support for a nine-month extension.

Major oil producers will join members of the Organization of the Petroleum Exporting Countries in Vienna on Thursday to discuss extending the six-month agreement to cut production by 1.8 million barrels a day set to expire in June. CNBC reports in its article Oil prices whipsaw in wild trading as potential holdout Iraq supports OPEC deal that U.S. West Texas Intermediate crude jumped to $51.06 a barrel in early trading, its highest level since April 19, on signs that consensus among OPEC members is forming around extending coordinated production curbs.

The Brent forward curve shows prices rising towards $55 a barrel by March 2018, and prices declining from there towards $53.80 a barrel by late 2018.

Pradhan said that India had been and continued to be a reliable customer of OPEC countries, the only big economy where the demand for crude oil continues to rise each year.

Oil prices fell 1 percent on Tuesday after U.S. President Donald Trump proposed to sell half of the United States' Strategic Petroleum Reserve (SPR) in the next 10 years as well as to speed up Alaskan exploration. Prices rose 5.5 percent last week. Additionally, if OPEC fails to supply oil to distributors they will look elsewhere, and after production cuts end new supply contracts will be in place.

Ibe Kachikwu, Nigeria's minister of state for petroleum, had said Nigeria will be seeking another six month exemption from the OPEC deal. This is done to prevent oil prices from sliding back below $50 per barrel.

Iraq and Iran were the main stumbling blocks for OPEC in reaching its last output-cutting decision in December.

Bjarne Schieldrop, chief commodities analyst at SEB Markets, said, "The decision (to extend cuts) seems to be nearly a done deal; there seems to be a very high harmony in the group".

"Iraq agrees with Saudi Arabia's position on extending the agreement to reduce oil production for an additional nine months", the Iraqi minister announced on May 22.

"No surprises", said a second delegate.

The key is whether stocks are declining, but an extension of the cut can keep oil prices above $50, he added.

  • Zachary Reyes