OPEC panel said to weigh deeper, longer oil-sup­ply cut

The Globe and Mail (Alberta Edition) - - REPORT ON BUSINESS WEEKEND - ALEX LAWLER VI­ENNA RA­NIA EL GA­MAL

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.

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