OPEC, non-members extend oil output cuts

"Fracking has only just begun here in the United States and it will be transferred swiftly to other countries overseas, so the supply of crude oil is going to increase rather dramatically in the years to come", he told the Reuters Global Markets Forum on Friday.

It's too early to decide on an extension of the output cuts, and OPEC will take up the issue in May, Barkindo said at Sunday's meeting, during which ministers will monitor compliance with the targeted reductions.

Leading global investment banking firm, Goldman Sachs, had warned that another downturn in global oil prices could come over the next three years, sparked by a new wave of supply stemming from mega projects that were planned years ago.

The US bank said that should the rig count stay at current levels and the impact of previously closed rigs returning to production was considered, then US oil production would rise by 235,000 bpd between the fourth quarter of 2016 and the first half of 2017. "We would see the relative lack of reaction in the price perhaps as a reflection of some disappointment that nothing more concrete was forthcoming", analysts at JBC Energy said in a report, referring to the conclusion of Sunday's talks.

JMMC had requested the JTC with the OPEC Secretariat to review the oil market conditions and revert to the JMMC in April 2017 regarding the extension of the voluntary production adjustments as stipulated in the Declaration of Cooperation, in order to ensure market stability. So far, five Opec members, including Kuwait and Angola, have backed an extension of the cuts.

OPEC and eleven other leading producers agreed late previous year to cut their combined output by nearly 1.8 million barrels per day in the first half of 2017.

The OPEC agreement was supported by 11 non-OPEC states, which had joined the deal by promising to reduce their combined oil output by 558,000 barrels per day. The price for Brent crude oil was up 0.2 percent minutes before the start of trading in NY to $52.57 per barrel.

The reality of global oil market fundamentals is getting in the way of OPEC's verbal intervention.

The accord was aimed at reducing bloated global inventories and propping up weak oil prices.

The comments that the agreement could be extended, coupled with the drop in Libya's oil output by roughly a third, or 252,000 barrels per day because of production blockage at the Sharara and Wafa oil fields, has boosted oil prices. It now seems OPEC is not prepared to wait until June and has instead made a decision to take action at this weekend's meeting.

OPEC now faces a market that has significant doubts over the effectiveness of the output cuts.

Meanwhile, two oilfields run jointly by Saudi Arabia and Kuwait will resume operations within two months after a years-long shutdown spurred by a row between the producers, Marzouq said yesterday.

  • Wendy Palmer