Kuwait adds to growing consensus on OPEC oil output deal extension

Gladys Abbott
May 20, 2017

Oil futures were up in North American trading on Tuesday, with prices headed closer to daily highs reached in the prior session, as investors looked ahead to weekly data from the US on stockpiles of crude and refined products. The American Petroleum Institute was scheduled to release data for last week at 4:30 p.m. EDT on Tuesday, with the U.S. Energy Information Administration report due at 10:30 a.m. EDT on Wednesday.

June West Texas Intermediate crude settled at USD48.66 a barrel on the New York Mercantile Exchange, down 19 cents, or 0.4%.

The U.S. benchmark ended Monday's session with gains of $1.01, or 2.1%, after hitting its highest since April 28 at $49.66. The small move higher Tuesday put both Brent and USA futures on track to rise for a fifth day in a row.Kuwait's oil minister, Essam al-Marzouq, backed the previous day's agreement by Saudi Arabia and Russian Federation on the need to extend a crude output cut by OPEC and other producing countries of 1.8 million barrels per day (bpd) until the end of March next year.

Yet, OPEC's own production rose in April, by 65,000 barrels daily last month, to 31.78 million bpd, with increased production in Nigeria and Saudi Arabia compensated for production outages in Libya and lower production rates in Iran, both exempt from the cut agreement.

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On Monday, Russian and Saudi energy ministers said in a joint statement that Moscow and Riyadh meant to propose a 9-month extension of the current Vienna agreement on oil output cuts on the existing conditions at the OPEC ministerial meeting in late May.

However, the 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

Surging U.S. output has raised concern that the cuts are failing to reduce a glut. Production fell 0.1% month-over-month and 1.1% year-over-year.

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