OPEC to extend production cuts after sustained dip in oil prices

OPEC to extend production cuts after sustained dip in oil prices

OPEC is expected to extend production cuts among its members and leading oil producing nations by another six months, as global oil prices stooped below the US$50 mark.

The production cuts were agreed between OPEC members and key global oil producers in December 2016, but look set to continue after increased shale production in the US deflated the market.

Recent US stockpile data revealed production increased by 5 million barrels a day, a significantly higher figure for the forecasted rise of 1.8 million barrels.

Ole Hansen, a commodities analyst at SaxoBank said: “For OPEC to extend the cuts into the second half of the year will be fraught with problems because in order to have a continued successful period of cutting, OPEC needs to have non-OPEC countries on board as well, especially Russia.”

However, latest reports suggest Russia will continue to obey the OPEC production cuts, despite inconsistent compliance thus far.

Russian Economic Development Minister Maxim Oreshkin warned that the resiliency of US shale to lower prices was putting a ceiling on the price of oil, which may motivate Russia to honour the extending of production slashes.

@RGNonline