After OPEC deal, Texas oil regulator boasts of victory

Angelica Greene
May 27, 2017

Oil producers today made a decision to extended cuts in oil output by nine months to March 2018, amidst a global glut of crude and rising USA shale gas production which saw prices more than halve in the past three years.

OPEC has agreed to continue production cuts for a further nine months, according to reports on Thursday.

It is not known if Opec has agreed to keep cuts at the current level or make deeper cuts.

The next Opec and non-Opec meeting is scheduled for Nov 30, delegates said.

"Maintaining the same production cuts through March is a very safe and nearly certain option to do the trick".

In December, the Organization of the Petroleum Exporting Countries agreed its first production curbs in a decade and the first joint cuts with non-OPEC producer nations, led by Russian Federation, in 15 years.

The oil market is also looking for clues as to what OPEC may do in 2018, a year when USA shale output growth is expected to match an increase in demand. As a effect Brent crude has largely sat around the $50 per barrel mark in recent months, with the price at around $54 on Thursday morning ahead of the Opec meeting in the Austrian capital. "We thought the market would sell off if it was just (an extension of) nine months".

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The OPEC ministers said they would cut supply by 1.8 million barrels a day from the market during their meeting on Thursday in Vienna.

OPEC now accounts for about one third of the world's oil production.

Opec oil ministers were continuing their discussions in Vienna after three hours of talks.

That said, we maintain a neutral stance on the oil price near term and highlight important downside risks from a potentially more hawkish Federal Reserve, which is set to meet in June. Other countries in the groups have their own reasons for curtailing oil exports and reducing prices.

"We have seen a substantial drawdown in inventories that will be accelerated", al-Falih said.

Already, Saudi Arabia and Russian Federation, a non-OPEC state - both world's top two oil producers - have agreed on the need to prolong the current cuts until March 2018.

Other reports by GizPress

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