Oil rises with Opec set to prolong supply cuts at Thursday meeting
- Author: Zachary Reyes May 26, 2017,
May 26, 2017, 0:54
European stocks gave back early gains Thursday amid rising oil prices and increasing concerns over regional security as investors took a brief pause from the global equity market rally inspired by dovish minutes from the U.S. Federal Reserve's last policy meeting.
"There have been suggestions (of deeper cuts), many member countries have indicated flexibility but. that won't be necessary", Falih said. While stubbornly high global inventories have taken longer than expected to drain, signs that USA stockpiles are easing from a record is adding to optimism.
The members of OPEC are gathering behind closed doors in Vienna today to decide whether the producers in the cartel should extend the oil production cuts that were agreed upon last December.
OPEC and other oil-producing nations have extended their output cuts for an additional nine months in an effort to shore up prices. USA light crude oil was up 20 cents at $51.67.
The number of USA oil rigs keeps climbing, and with a more efficient cost base Cohen and Russell said that U.S. drilling companies should remain profitable unless West Texas Intermediate (WTI) crude falls consistently below $US50 a barrel.
With the deal due to expire at the end of June, one participant said the group had opted for a nine-month extension.
Thursday's decision by the 14-member OPEC cartel and 10 other countries led by Russian Federation, means that the reductions of 1.8 million barrels a day agreed on in November will stay in place until March.
Equatorial Guinea said in January it was seeking to become OPEC's 14th member and the sixth from Africa, an addition that would help raise the continent's influence and profile in the corridors of global oil production and pricing. Should that be the case, some 1.2 million in oil demand is about to be eliminated overnight, forcing OPEC to quickly sit down again and hammer another, far deeper production cut.
Brent has averaged $53.90 a barrel so far this year.
While fuel stockpiles around the world are falling, ministers from Saudi Arabia, Algeria, Venezuela and the United Arab Emirates acknowledged that the surplus built up during three years of overproduction won't be cleared until at least the end of 2017, or possibly even later.
Non-OPEC countries that are part of the deal will attend the meeting, including Russia's Energy Minister Alexander Novak.
When the oil price was at its nadir in 2016, scores of U.S. firms went bankrupt. As a result, the London-based oil contract has risen above both its 50- and 200-day moving averages at $52.40 and $52.00 respectively, as well as prior resistance at $52.70.
Jabbar Ali Hussein Al-Luiebi, his Iraqi counterpart, said "We support the proposal for nine months", while a committee of all nations participating in the cuts also are recommending a nine-month extension on Wednesday.