OPEC output cuts to be extended to year end: OPEC panel recommendation

OPEC output cuts compliance at 98 per cent in March

The OPEC and non-OPEC Joint Technical Committee (JTC) has recommended that the OPEC output cuts that began in January and were to end in June be extended to the end of the year, according to a Reuters’ source.

Last January, a number of OPEC and non-OPEC oil producing countries agreed to cut production by 1.8 million b/d for six months in an effort to reduce the global oversupply of crude.

So far, compliance with the deal has been impressive, with data showing all participants reached 98 per cent of the pledged output reductions pledged as part of the pact.

Two sources said the March rate was an increase over February’s level.

Despite the optimism over the extension of the OPEC output cuts agreement, oil prices dipped on Friday.  Brent crude traded under $52/barrel on concerns that increased US shale production and high inventories would overshadow OPEC and its allies’ efforts to curb supplies.

The JTC recommendation to extend the supply cut pact was expected following signals from oil ministers representing Saudi Arabia and Kuwait saying on Thursday that producers were expecting to extend the deal.

Russian Energy Minister Alexander Novak says a decision to prolong the pact has not been made yet and will be discussed at an OPEC meeting on May 24 in Vienna, one day before OPEC ministers and their non-OPEC counterparts are scheduled to meet.

According to OPEC’s most recent report, OPEC’s own compliance with the accord reached 103 per cent last month.

The JTC was established in January to monitor compliance with the OPEC deal.