Opec and non-members agree to extend cut in oil supply

Opec and non-members agree to extend cut in oil supply

Opec and non-members agree to extend cut in oil supply

Mohammed Barkindo, Opec's secretary-general, claimed that swollen global stockpiles of fuel had been "massively drained" in recent months, thanks to high levels of compliance with the agreement by a total of 25 countries. There's been a "huge drop" in inventory of 170 million barrels this year, but it needs to be reduced further and "this is not the time to take our foot off the accelerator".

Some producers think the pact should be extended for three or four months, others want an extension until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.

The extension of the exemption period means more revenue earnings from oil exports by Nigeria, as the country would be able to export all the oil it produces as oil prices hover around $57 a barrel.

U.S. West Texas Intermediate (WTI) crude CLc1 settled at $50.66 a barrel, up 11 cents or 0.2 percent, within a few cents of its May peak. The current agreement in cooperation with Russian Federation and other non-OPEC producers to take 1.8 million barrels a day off the market, is in place till March 2018.

OPEC's concern is that it could lose market share to USA producers if the cartel extends its production cuts for too long.

The decision was made at the meeting of the joint ministerial monitoring committee of OPEC and non-OPEC countries which held in Vienna on Friday.

Still, as USA shale oil continues to thrive and seasonal demand wanes, the surplus that has weighed on markets for three years could soon return.

Even if that level of compliance continues, supply and demand would be finely balanced next year and ending the accord could put the market back in surplus, data from the International Energy Agency indicate.

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"OPEC members are trying to target a figure of close to $60 a barrel".

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who led Nigeria's delegation to the meeting in Vienna had argued that although Nigeria's production recovery efforts have made some appreciable progress since October 2016, Nigeria was not yet out of the woods.

He also added that if more cuts are needed from March next year, then it's likely they will be imposed.

The ministers, however, stopped short of taking additional action amid reports that they wanted to wait until January before deciding whether to extend the curbs beyond the first quarter of 2018.

Earlier, the US Energy Information Administration (EIA) reported that crude production in the country touched 9.51 million bpd in the week ending 15 September from 8.78 million bpd in the previous week.

Caps for both Libya and Nigeria were discussed but not finalized at Friday's meeting. But, no new details on future production cuts to maintain prices at a long-term, satisfactory level were agreed.

US crude stocks rose a less than expected 1.4 million barrels at the end of last week, The American Petroleum Institute (API) said on Tuesday, while gasoline stocks fell 5.1 million barrels and distillates dropped 6.1 million barrels.

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