Oil prices see-saw, sterling hit as May's lead shrinks

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Opec last year's intervention led to improvement in the oil price that in turn incentivised United States shale producers to ramp up production.

Well then - it looks as though OPEC, Russia and other major oil producers have agreed this week that they are going to hold their collective brush power for another nine months.

"The outcome of the OPEC meeting which was scheduled on 25th May 2017 made a decision to cut 1.8 million barrels per day through March 2018".

David Arrington, president of shale oil producer Arrington Oil & Gas in Midland, Texas, said that how USA producers respond in coming months will have as much of an effect on pricing as OPEC's cuts. Investors hope that oil producers would be a step ahead.

"Malaysia welcomes the decision agreed today and reaffirms its commitments to today's agreement and wishes the cooperation to be successful", he added.

In stock-specific action, the energy firms took a hit on Friday after crude prices fell nearly 5 percent the previous day after the OPEC disappointment.

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It was the biggest percentage decline for both benchmarks since March 8th.

The Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on Wednesday at $53.28 for a barrel of 159 litres, which was higher than the previous day's close at $52.64.

Now however, oil stockpiles of 3 billion barrels - 300 million above the five-year average -are keeping prices low, even as production is cut. This is why Saudi cargoes to the U.S.in recent months have totaled 1.21 million barrels a day - the highest rates since 2014, the year of the oil price crash.

USA crude prices tumbled 0.6 percent to $48.57 a barrel on Friday, after losing 4.8 percent overnight, set to end the week 3.5 percent lower.

"But all indications discovered that a nine-month extension is the optimum", he said. But it also spurred growth in the US shale industry, which is not participating in the output deal, thus slowing the market's rebalancing. USA shale production requires a higher price to be profitable compared with traditional crude oil.

According to Goldman Sachs, the negative reaction was driven by the lack of greater cuts, an absence of caps on supplies from Libya and Nigeria that are still exempt from the deal, and no "clear exit strategy".

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