Oil falls as OPEC prepares to extend output cuts

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But curiously, it did the opposite.

OPEC published its 172nd semi-annual meeting conclusions and confirmed that it analyzed oil market developments since it last met in Vienna at the end of November and reviewed the oil market outlook for the remainder of 2017.

Brent crude is 1.6% lower at $52.35 a barrel following confirmation of the extension until March 2018, while United States oil is down 3.2% at $49.73.

According to Zavalny, the oil prices will remain in the range of $50-60 per barrel.

The two sides made a decision to remove about 1.8 million barrels per day (bpd) from the market in the first half of 2017 - equal to 2 percent of global production, taking October 2016 as the baseline month for reductions. The agreement, first hashed out in January, was supposed to last only six months.

That doesn't mean, though, that the countries won't extend the cuts in March 2018 but it will be decided "closer to the date", the minister explained.

He told a news conference he was not anxious by what he called Thursday's "technical" oil price drop and was confident prices would recover as global inventories shrink, including because of declining Saudi exports to the United States.

"A nine-month extension of the output cuts is already baked into prices", said Olivier Jakob, energy markets analyst at Swiss consultancy Petromatrix.

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"The black stuff has now settled at a more manageable half a percent decline - a position that is admittedly nearly a dollar below its morning peak", he added.

"It is a very useful agreement in terms of reaching a fair, optimal balance of supply and demand and fixing the oil price in the interests of both buyers and producers, because some kind of turbulence in this balance is provoked by ... oil production in America".

"Nine months with the same level of production that our member countries have been producing at is a very safe and nearly certain option to do the trick", he said, speaking from the OPEC meeting in Vienna.

The firmer oil price supports the USA tight oil industry, helping shale drillers make plans, Hittle added.

The "Vienna group", which includes Russian Federation, agreed a landmark deal past year to cut production by 1.8m barrels a day, which saw the oil price recover to $50 to $55 a barrel in recent months. "This shows there's not much more OPEC can do".

"This offsets almost half of OPEC's production cuts", it noted.

OPEC does not have plans to impose restrictions on oil extraction in Libya and Nigeria in the nearest future, al-Falih stated, as the two countries' production does not affect the plan to reduce global oil stocks.

Al-Falih said it was important for shale oil producers, like those in the US, to pace their output. That could prompt healthier investment in new rigs and drilling. "For 2017, the OPEC decision today does not make a large difference to our oil price forecast".

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