Published: Sat, May 27, 2017
Markets | By Terence Owen

OPEC agrees to extend oil output cuts till March

OPEC agrees to extend oil output cuts till March

But the intended impact could be short-lived. Most of its hydrocarbons production is exported to markets in North America, Europe and Asia, notably the U.S., Spain, Italy and Canada. When unveiled in December, it helped establish a floor under crude oil prices of around $50 per barrel, though that level has come under threat from the subsequent market recovery in North America.

"Some market participants may have expected either a deeper cut, a longer one, inclusion of more countries, or other such icing on the cake", analysts at Barclays Plc including Michael Cohen wrote in a research note.

"The risk of a rate hike by the US Federal Reserve in June is still sort of hanging over the market, while a broader weakness in some industrial commodities and oil was probably a factor [for a slight weakness in gold this morning]", said Jordan Eliseo, chief economist at ABC Bullion. That will be welcome news to consumers and energy-hungry businesses worldwide but could continue to strain the budgets of some of the more economically-troubled oil-producing nations, like Venezuela and Brazil. The two sides chose to remove about 1.8 million barrels per day from the market in the first half of 2017-equal to 2% of global production, taking October 2016 as the baseline month for reductions. He also praised the Saudi role to stabilize the oil market via their decision of cut production which is still active until now.

He noted that all indications are solid that a nine-month extension is the optimum and should bring the organisation within the five-year average by end of the year, added that they wanted to extend it to avoid a stock building in the first quarter of 2018. He spoke only on condition of anonymity because he was not authorized to divulge the information prematurely.

Earlier in May both Saudi Arabia and Russian Federation, which is not a member of OPEC but is seen as a critical part of any potential agreement, said they backed extending the production cuts until March 2018.

Will OPEC look to Nigeria for output cuts? A six-month extension would be "disappointing" while a nine-month pledge will offer some support to oil prices.

United's Europa league win gave Manchester a lift, says Ferguson
Bastian Schweinsteiger has a reward awaiting him now that Manchester United has won the Europa League tournament this season. He has been out since last month after he sustained a serious knee injury in the quarterfinal match against Anderlecht.

French President-elect Macron gears up for challenges ahead
That means many of them may be burdened by the handicap of being largely unknown to voters in constituencies they compete for. On May 7, Macron was elected French president, taking around 65 percent of the vote to Le Pen's 35 percent.

Predators will play for Cup
Braden Holtby of the Washington Senators (29), Ryan Miller (28), Carey Price (25) and Craig Anderson (22) round out the top five. In the final four games of the Western Conference Final, the Predators outscored the Ducks 10-0 in the third period.

This said, the agreement would likely succeed in preventing prices from returning to the rock bottom levels seen at the start of a year ago. USA shale production requires a higher price to be profitable.

Hong Kong: Energy firms took a hit on Friday after crude prices plunged nearly five percent the previous day as traders were left disappointed by OPEC's latest output cuts.

Japan's Nikkei .N225 also slipped 0.2 percent, on track for a 1 percent increase for the week.

The global crude glut has persisted even after OPEC agreed to cut production in the first half of the year.

In terms of production in 2016, the EIA ranked Equatorial Guinea as the world's 36th largest, pumping 244,000 barrels per day (BPD) of oil and other liquids.

"This offsets almost half of OPEC's production cuts", it noted.

Like this: