RIYADH, MOSCOW FAVOUR EX­TEN­SION

Move nec­es­sary to reach goal of re­duc­ing global in­ven­to­ries to 5-year low, they say

New Straits Times - - Business - BEI­JING

SAUDI Ara­bia and Rus­sia said they favour pro­long­ing oil out­put cuts by global pro­duc­ers through the end of the first quar­ter of next year, set­ting a firmer time­frame for a likely ex­ten­sion of the curbs into next year.

Crude prices jumped. Ex­tend­ing the curbs at al­ready agreed-upon vol­umes was needed to reach the goal of re­duc­ing global in­ven­to­ries to the five-year av­er­age, said the en­ergy min­is­ters of the world’s big­gest oil pro­duc­ers in a joint press con­fer­ence, here.

They will present their po­si­tion ahead of a meet­ing be­tween Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (Opec) and other na­tions that are part of the agree­ment in Vi­enna this month.

Rus­sia and Saudi Ara­bia, the largest of the 24 na­tions that agreed to a deal to cut pro­duc­tion for six months start­ing in Jan­uary, are reaf­firm­ing their com­mit­ment to the deal amid grow­ing doubts on its ef­fec­tive­ness.

Surg­ing United States pro­duc­tion has raised con­cern that Opec and its part­ners are fail­ing to re­duce an over­sup­ply.

Oil has sur­ren­dered most of its gains since their deal last year.

“The agree­ment needs to be ex­tended as we would not reach the de­sired in­ven­tory level by end of June,” said Saudi Ara­bia’s Khalid Al-Falih dur­ing the event with Rus­sia’s Alexan­der No­vak.

“There­fore, we came to the con­clu­sion that end­ing would prob­a­bly be bet­ter by the end of first quar­ter next year.”

Oil fu­tures jumped as the min­is­ters spoke. US West Texas In­ter­me­di­ate added 1.8 per cent to US$48.70 (RM214.20) a bar­rel on the New York Mer­can­tile Ex­change, the high­est since May 2.

Global bench­mark Brent crude added 1.7 per cent to US$51.69 on the ICE Fu­tures Europe ex­change. Both are still more than 50 per cent be­low peaks in 2014.

As Opec and its al­lies curb sup­ply, pro­duc­tion in the US, which is not part of the agree­ment, has risen to the high­est level since Au­gust 2015 as drillers pump more from shale fields.

But Amer­i­can crude in­ven­to­ries are show­ing some signs of shrink­ing, fall­ing for the past five weeks from record lev­els at the end of March. Bloomberg

BLOOMBERG PIC

Saudi Ara­bia’s En­ergy Min­is­ter Khalid Al-Falih (left), and Rus­sia’s En­ergy Min­is­ter Alexan­der No­vak at a news con­fer­ence on the side­lines of the Belt and Road fo­rum in Bei­jing yes­ter­day.

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