Saudi oil minister confident in extension of production cuts

By extending cuts into 2018 and promising to boost output next year, OPEC could force the oil market into backwardation that would scare away private equity and other investors who have been funding American shale producers. The talks are closely followed elsewhere as they can affect everything from the share price of Exxon Mobil Corp. to the Brazilian real and Nigerian sovereign bonds. The meeting took place two days prior to the OPEC ministerial meeting that is scheduled from May 25, 2017.

Saudi Arabia and Russian Federation, the biggest of the 24 producers in the accord - and which don't get on in other areas either - agreed last week that it should be extended until March. It is far below cuts from OPEC at a time when demand is likely to keep growing strong, said Justin Jenkins, analyst at the firm.

Pradhan also said OPEC producers should work towards a "responsible price" for oil and Asia should be treated on a equal footing with Western consumers.

The last thing the Saudis need right now is a scab, but that's the role Iraq seems intent on playing in this high-stakes drama, and it seems likely things will get worse if and when OPEC & co. agree to extend cuts through March on Wednesday. The cuts were initially agreed to last six months until the end of June.

But OPEC members whose governments rely heavily on oil revenue need a higher price than that to stay out of red ink.

Some analysts have stated that the United States no longer needs a large supply since the flow in domestic production brought about by shale oil output over the past decade and the cut down in the country's import of crude oil.

Another delegate, however, said a one-year extension was unlikely to garner wide support.

President Donald Trump's proposal to sell half of the usa strategic oil reserve highlights a decline in the biggest oil user's reliance on imports - and a weaning off OPEC crude - as its domestic production soars.

With the problem of shale output and the strategic petroleum reserve looming for next year, OPEC is in a hurry to hammer a deal now that reduces the glut. This gathering will then be followed by the joint meeting of the cartel ministers and other producers participating in the six-month production cuts. Non-OPEC nations Oman and Mexico also confirmed their support for prolonging the curbs through the first quarter of 2018.

Deutsche Bank said the market had priced in a nine-month extension. "I am not too sure".

By 1415 GMT, Brent crude was trading flat.

The plan calls for sales to rise gradually, which would tend to pressure prices for oil delivered further in the future, making the contracts cheaper than those at the front of the futures curve.

If OPEC maintains its April crude production of 31.8 MMbpd throughout the rest of the year, oil stockpiles will shrink, according to the IEA.

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