OPEC likely to extend output deal

Oil prices continued to slide Wednesday, falling to their lowest level since November as oversupply concerns heap more pressure on OPEC to extend its supply agreements in May.

Oil futures are now edging closer to where they were before OPEC and non-OPEC members agreed in November to curb oil supplies by 1.8 million barrels per day, sending prices surging. U.S. benchmark West Texas Intermediate fell 20 cents to US$48.04, after plunging as low as US$47.30 earlier in the day. Brent crude contracts were down 37 cents to US$50.59.

Prices saw their biggest drop in months last week after higherthan-expected U.S. crude inventory levels turned many investors and analysts bearish on oil.

With that, attention has now shifted back toward OPEC and whether it will ultimately agree to extend its supply agreement by another six months after its current quotas expire in June. The cartel is scheduled to meet in Vienna on May 25 to discuss the extension.

RBC Capital Markets analyst Helima Croft says she expects OPEC to extend the cuts, as fears of a collapse in oil prices override concerns over a loss of market share.

When OPEC met last November to discuss the production cut, many members were struggling to contain growing civil unrest as falling oil revenues forced them to slash spending on social programs and other subsidies.

“These guys encountered $26 per-barrel oil in January — they were worried about losing power,” Croft said over the phone from New York. “There was a view heading into that November meeting that if they didn’t take action they’d be in the $30s again.”