OPEC panel said to weigh deeper, longer oil-supply cut
An OPEC panel reviewing scenarios for the oil producer group’s meeting next week is looking at the option of deepening and extending a deal to reduce crude output, Organization of Petroleum Exporting Countries sources said on Friday, in an attempt to drain inventories and support prices.
Saudi Arabia and non-OPEC member Russia, the world’s toptwo oil producers, have agreed on the need to prolong the current cuts until March, 2018, although Saudi Energy Minister Khalid al-Falih said extended curbs would be on the same terms.
OPEC’s national representatives, plus officials from its Vienna secretariat, met on Wednesday and Thursday. Their panel, the Economic Commission Board, was due to conclude talks on Thursday, but they finally ended on Friday, OPEC sources said.
Among the scenarios being considered by the panel were a six- or nine-month extension with a possible deeper cut, sources said.
“All options are open,” one source said.
That source said a deeper cut in output was an option depending on estimated growth in supply from non-OPEC producers, mainly U.S. shale-oil firms, among other scenarios.
The board does not set policy and its meeting precedes the gathering of OPEC and non-OPEC oil ministers on May 25 to decide whether to extend their deal to reduce output beyond June 30.
On Friday, oil prices were heading for a second week of gains, trading above $53 (U.S.) a barrel on growing expectations that producers will agree further steps to support the market when they meet next week.
OPEC, Russia and other produc- ers originally agreed to cut production by 1.8 million barrels a day for six months from Jan. 1.
Oil prices have gained support from reduced output, but high inventories and rising supply from producers not participating in the accord have limited the rally, pressing the case for extending the curbs.
In addition to the final part of the board meeting, there was also a technical discussion on Friday among OPEC and non-OPEC countries participating in the supply cut. This was not expected to result in any decision.