OPEC supply cuts could be deepened, extended: sources

OPEC supply cuts

Cartel members and other participants in the OPEC supply cuts will meet in Vienna next week to discuss how to reduce the global crude supply. OPEC photo.

Panel reviewing options for OPEC supply cuts

An OPEC panel reviewing options available to cartel members looking for ways to drain global crude inventories is considering deepening and extending the OPEC supply cuts agreement, according to Reuters sources.

OPEC and 11 non-OPEC members participating in the production cut agreement will meet in Vienna next week to discuss extending the pact that has reduced crude output by 1.8 million barrels per day (b/d) since the beginning of the year.  The agreement was originally set to conclude at the end of June.

Saudi Arabia and Russia have publicly agreed to the need for an extension until the end of March next year, however, Saudi Arabia’s Energy Minister Khalid al-Falih said any extension of the cutbacks would be on the same terms.

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On Wednesday and Thursday, OPEC’s national representatives along with officials from its Vienna secretariat met.  Their panel, known as the Economic Commission Board (ECB), was expected to close talks on Thursday, but did not wrap up discussions until Friday, according to Reuters’ sources.

The ECB does not set cartel policy.  “Today’s meeting is just informative,” an OPEC source said.

Coming out of the talks, sources said the possible scenarios under consideration by the panel included a six- or nine-month extension and possibly a deeper cut.

“All options are open,” one source told Reuters.

That source said a deeper production cut was on the table and depends on the estimated growth in supply from non-OPEC members, mainly US shale producers, among other possible scenarios.

With investors upbeat concerning the likely extension of the OPEC agreement, oil prices headed for a second straight week of gains on Friday, trading above $53/barrel.

 

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