Russia to reach decision by May 24
LONDON: Oil prices rose on Friday after a slide to a onemonth low the previous day prompted investors to buy at cheaper levels ahead of an Organization of the Petroleum Exporting Countries (OPEC) meeting next month at which producers could prolong output curbs.
Most analysts polled by Reuters expect the deal between OPEC and non-OPEC producers struck in December 2016 to be extended to the end of this year.
“OPEC ... effectively said the production cut will be extended, meeting the reality of the restart of a big Libyan oilfield and the continued expansion of US shale oil,” said Greg McKenna, the chief market strategist at AxiTrader.
Compliance with the output deal is still a major price driver and comments from Russia that it would meet its end-April target of cutting output by 300,000 barrels per day (bpd) also supported prices on Friday.
Non-OPEC member Russia said it would define its position on whether to support an extension of the output deal by May 24, a day before the official OPEC meeting in Vienna.
Benchmark Brent crude futures were trading 40 cents higher at $51.84 a barrel by 1406 GMT. US light crude fetched $49.53 a barrel, up 56 cents.
Despite Friday’s gains, both contracts were set for their second straight weekly and monthly losses after Thursday’s price drop, which was driven by news of oilfields in Libya resuming production.
“The markets see such a price drop as a nice buying opportunity within the relatively small trading ranges we see,” said Hans van Cleef, senior energy economist at ABN AMRO Bank in Amsterdam. “After all, the main drivers — OPEC production cut versus US production gains — are unchanged.”
An uptick in prices since the output deal has already increased profits at some major oil companies whose investments in new projects will also affect supply and demand balances.
France’s Total and US oil producers ExxonMobil and Chevron all reported better than expected first-quarter results this week.
A Reuters poll published on Friday showed analysts expect oil supply and demand to balance out by the end of this year if producers agree to extend the output cut.
Nevertheless, most cut their average yearly price forecasts, with Brent expected to average $57.04 a barrel, compared with last month’s forecast of $57.25.