The expectations regarding the Organization of the Petroleum Exporting Countries will not only extend supply cuts next 2018, but will also expand in order to tighten the market made oil prices advance on Monday. This movement will also support future prices.
Prices were pulled up by prospects that an agreement between OPEC and non-OPEC members, including Russia, will reduce production by 1.8 million barrels per day. The said deal will be extended until March next year, rather than offsetting just the first half of 2017.
ANZ noted on the same day that the price of crude oil is still moving up as the market is sure that members of OPEC will do a rollover in the output reduction deal. Sources cited that the option of the output cut expansion was also being talked about before the meeting of OPEC with its allies on May 25 in Vienna.
Regardless of the news, Rivkin Securities’ investment analysts James Wood said the likelihood of deepening the cuts are still inadequate as officials would possibly watch the effects out the output cuts extension before they address other actions. However, he added that a bigger cut may be needed to curb in glut, due to the brimming supply from United States has weakened the efforts of OPEC to constrict the market.
U.S. West Texas Intermediate (WTI) crude rose more than 0.6 percent or 29 cents at $50.62 a barrel. Meanwhile global benchmark Brent crude edged higher by 0.5 percent or 25 cent to trade at $53.86 a barrel. WTI and Brent both rose as much as 10 percent from their lows earlier this month.