OPEC likely to extend production cuts into next year

The Opec's cuts have helped push oil back above $50 a barrel this year, giving a fiscal boost to producers.

Rising U.S. production has limited the effectiveness of the output deal.

Oil prices are influenced at least as much by developments in the remote oil fields of west Texas and at the petrol pumps of India as they are by high-profile meetings in the hotels and conference rooms of Vienna.

Though market observers have been anxiously waiting for bloated U.S. stockpiles to shrink, investors shrugged off a 4.4 million barrel decrease in crude stockpiles reported by the U.S. Energy Information Administration Wednesday.

Mills said that while "you can't say OPEC is dead", US oil producers are poised to scale up their share of the global oil market.

OPEC and their allies will vote on extending the current deal to remove 1.8 million barrels per day from the market Thursday at the biannual OPEC meeting in Vienna.

West Texas Intermediate, the USA benchmark for the price of oil, was down 0.37 percent to $51.28 per barrel. That's why we should be surprised that some OPEC members have failed to stick to the agreement at all times.

The Iranian oil minister stated that the OPEC production limits would remain in place, but the duration is unclear with the potential for production cuts to be extended for 3, 6 or 9 months. This month, however, OPEC's exports declined significantly, the firm discovered.

How long will it take for oil inventories to drop to normal levels?

"Perhaps more so than in the recent past, the oil market is data dependent, waiting on the tangible signs of declines in visible oil stocks and exports before buying into OPEC pledges".

On Friday morning, Brent oil saw its price crash all the way down to 47 dollars per barrel.

The International Energy Agency, which counts the United States as a member, requires member countries to keep strategic stocks equal to 90 days of the previous years net oil and product imports.

Meanwhile, Iran, which received an exemption to raise output slightly back in November 2016, has not commented on the possible outcomes of the latest meeting so far, with the country's oil minister Bijan Zanganeh not entertaining any queries from the media in the run up to the Opec meeting.

So, what does that mean for oil markets?

The data comes one day before OPEC, along with non-member nations, are scheduled to decide whether to extend its agreement to cut world supply, an effort that has only recently started to bear fruit in global inventory figures. Venezuela's oil minister had earlier told Rudaw that OPEC state members agreed to reduce oil production for nine months.

Ecuadorian oil minister Carlos Perez said Tuesday that two proposals are on the table - a six-month extension and a nine-month one, both at current quotas. Russian Federation is investing in new production capacity in the Arctic and the country's output hit a record level just before the OPEC deal went into effect. Distillate fuel demand averaged over 4.2 million barrels per day over the last four weeks, up by 3.6% from the same period a year ago. Saudi Arabia has shown that it still regards oil to be an important political lever; according to some commentators, this means that the USA could be vulnerable if the volume of oil held in the strategic reserve is significantly reduced. To be more specific, the demand for OPEC oil is expected to increase all the way up to 32,1 million barrels a day.

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