Oil Prices Rise On Expectation Of Output Cut Extension

Falih said that, during a visit to Bandar Seri Begawan, he conveyed to Brunei's energy minister the kingdom's keen interest in fostering cooperation with Brunei on all levels.

In the meantime, some OPEC producers themselves raised production and exports in order to compensate for lower oil prices.

Friday's gains came after Saudi Governor Adeeb Al-Aama told Reuters that OPEC and non-OPEC nations were close to agreeing to extend a deal to curb production by 1.8 million barrels per day (bpd) after the current pact ends June 30.

"Based on the consultation I have had with participating members, I am rather confident that the agreement will be extended into the second half of the year and possibly beyond and that includes consultations I have had this morning with the Malaysian prime minister", Falih said during the opening address at the 19th ASIA Oil and Gas Conference in Kuala Lumpur.

From the beginning, oil producers envisaged the agreement on production cuts might need to be extended to rebalance the oil market fully.


Data from the InterContinental Exchange on Monday showed money managers cut their net long position in Brent futures and options by 35,709 contracts to 322,557 lots, equivalent to 322.56 million barrels of oil, in the week to May 2.

Some analysts have concluded even a six-month extension would not be enough to bring stock levels down to their long-run average.

Whether Falih's comments are bullish or bearish for oil prices is mostly a matter of perspective: is the barrel half full or half empty?

Both futures contracts have dropped by more than 10 per cent in the last month despite moves by the Organization of the Petroleum Exporting Countries and other exporters including Russian Federation to restrict supply to try to drain a global glut. Ministers will meet again in Vienna on 25 May to make the final decision on any extension.

The move dragged market sentiment back in favor of oil prices above $55 per barrel for the first quarter of the year.

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