Russian energy minister claims market will do what's needed to address glut

Russian energy minister claims market will do what's needed to address glut

The Organization of the Petroleum Exporting Countries' deal reached in Vienna on Thursday extends until March 2018 an agreement it made late past year to cut oil production by 1.8 million barrels per day.

Crude prices plunged 5 per cent after the decision as some had priced in more aggressive output cuts. Brent crude, the worldwide standard, rose 21 cents to $51.67 a barrel in London. Brent crude fell $2.60 to $51.36 a barrel on Thursday and was trading at $51.47 on Friday morning while the West Texas Intermediate slipped $2.58 to $48.78 a barrel and had reached $48.82 on Friday.

"With this kind of momentum and nearly two weeks to go until the vote, not only is this not going to be the breeze that May anticipated when she called the snap election last month, it could yet turn into a humiliating defeat for the Conservative leader and her party", said Craig Erlam, senior market analyst at OANDA.

OPEC and other oil nations meeting Thursday were set to extend their production cuts in an effort to shore up prices.

According to Libya's ambassador to Austria, who represented the country at the cartel's meeting, it is still producing less than half of its "original production quota". "With soft demand figures globally, that hope is fading nightly", Dutch bank ING said.

But the market was disappointed that there is no sign that the oil producers are considering steeper cuts to output.

Russian Federation and OPEC have tools to further support crude prices if needed, the nation's energy minister said in an interview as a lackluster outcome from their meeting in Vienna sent futures slumping below $50 a barrel in NY.

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The ban was announced in early March, however, never got into effect because it was nearly immediately blocked by federal judges. The new version made it clear the 90-day ban covering those six countries doesn't apply to those who already have valid visas.

American oil production has risen over 6% since the start of the year.

Kwan said it is unlikely that oil prices will pull back to $40 a barrel, with OPEC members and other countries like Russian Federation bound to intervene to deepen production cuts or extend them to shore up prices. They are expected to extend last year's production cut in a concerted attempt to prevent oil prices from falling.

In December, OPEC agreed its first production cuts in a decade and the first joint cuts with non-OPEC, led by Russian Federation in 15 years.

"We very much are benefitting from the improved oil price, you know it went as low as $28 a barrel".

Angola and Nigeria were Africa's top oil producers before the renewed militancy in Niger Delta, which brought the country's production down to as low as one million barrels per day, thereby forfeiting the coveted position to Angola.

"When this agreement ends, and coincides with strong shale growth, the market looks oversupplied again", Morgan Stanley wrote in a report on Friday.

"OPEC is being caught in a pincer movement of technology and policy that will, over time, erode oil use", said Bill Farren-Price, chief executive of Petroleum Policy Intelligence, an advisory firm for hedge funds and other investors.

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