OPEC Agrees 9-Month Extension To Production Cut, WTI Oil Price Slides

OPEC countries and other producers including oil giant Russian Federation are backing prolonging last year's production cut to shore up crude prices, strongly indicating that an extension is a done deal even before they meet formally on the issue Thursday.

Yet rising supply is partly due to US shale oil producers primarily from Texas, which have been happy to pump with abandon as improving technology and steady prices boosted returns.

"All options are open", an OPEC source said, adding that a deeper cut in output was an option depending on estimated growth in supply from non-OPEC producers, mainly USA shale oil firms, among other scenarios. The three-person body regulates the Texas oil industry.

Oil traders are concerned over how fast US shale oil producers will increase production to capture the rising prices.

The cuts are likely to be shared again by a dozen non-members led by top oil producer Russian Federation, which reduced output in tandem with OPEC from January.

OPEC is debating on Thursday whether to include Nigeria in its pact to restrict oil production, two OPEC delegates said.

It is not known if Opec has agreed to keep cuts at the current level or make deeper cuts. Other countries in the groups have their own reasons for curtailing oil exports and reducing prices.

"Nurturing a constructive and stable market environment is our highest priority".

The decision, announced Thursday by a high-level meeting of OPEC and non-OPEC ministers, means that the reductions of 1.8 million barrels a day agreed on in November will stay in place until March.

(Ecofin Agency) - Nigeria's oil minister, Emmanuel Kachikwu (photo), said Nigeria is not opposed to joining the cut measure of OPEC. It will take us about six months to get there.

"A nine-month extension would have little impact on our price forecast for 2017, which is for an annual average of $55 a barrel for Brent", said energy consultancy Wood Mackenzie. That deal, which has helped push up oil prices, is due to expire at the end of June.

The most important issue for OPEC is to stabilise the oil market and prompt a draw on global inventories, Venezuela's oil minister Nelson Martinez said on Thursday. He said compliance level for the month of April was 102 percent by both the groups, above the 98percent for March.

  • Zachary Reyes