Oil prices fluctuate as uncertainty persists over OPEC production-cut extension

Reuters

Reuters

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.

Members of OPEC first agreed to an oil production cut in December 2016, with Nigeria and Libya getting exemptions to enable them stabilise production in their countries.

Nigerian oil production remains below 1.8 million barrels per day, in compliance with a quota set on the African nation by OPEC earlier this year in response to its explosive output growth through 2017. "All options are left open to ensure that every effort is made to rebalance the market for the benefit of all", the document says.

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.

Ministers on a panel monitoring the pact, comprising Kuwait, Venezuela and Algeria, plus non-Opec Russia and Oman, were meeting in Vienna after oil prices gained more than 15 per cent in the past three months to trade above $56 (Sh5,700) a barrel. The current deal, which was extended earlier this year, runs to the end of March 2018.

USA crude received some support from a strong draw in gasoline stocks by 2.1 million barrels to 216.19 million barrels, traders said.

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Both are exempt from the deal to curb output and their resulting boost to production has weighed on prices.

The danger, however, is that higher crude prices could help shale oil producers in the United States - outside the deal - to ramp up output and put the market back in surplus.

In addition, rising crude prices have encouraged U.S. shale oil producers to ramp up output, a further reason why the drawdown on global inventories has taken longer than expected.

"There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices", Neil Atkinson, head of the IEA's oil markets and industry division, said at a conference in Bahrain.

Opec and Russian Federation said they were about halfway toward clearing a global oil glut and urged fellow producers to stay focused and finish the job, while stopping short of additional action to reassure a jittery market.

According to a statement issued by the spokesperson for the Ministry of Petroleum Resources, Idang Alibi, on Friday, the minister emphasised that Nigeria, as one of the older members of OPEC, would continue to work for the good of the organisation and its member countries.

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