Oil rises to one-month high as Saudi sees output curbs


Opec kingpin Saudi Arabia and Russian Federation voiced their agreement earlier this month to extend the oil output deal by nine months to help soak up excess supply in the market.

Khalid al-Falih says Iraqi Prime Minister Haider al-Abadi gave the "green light" to the nine-month extension proposal on Monday in Baghdad.

Opec and the Russia-led group of countries last year reached an agreement to remove about 1.8 million barrels per day (bpd) from the market in the first half of this year, leading initially to an oil price spike.

Speaking on Bloomberg television, Dicker credited Saudi Arabia for being "totally transparent" in their business dealings and OPEC members "for having all the discipline" in following through with their promised cutbacks; he also condemned the USA for "maniacally" undercutting the success of the cutbacks with steadily rising production.

Saudi's Falih said on Monday he expected the new deal to be similar to the old one, "with minor changes".

But OPEC's second-producer Iraq, whose output is growing fast, has said it would support extending output cuts in line with any OPEC decision, but did not specify for how long Baghdad was willing to extend the current cut. Not all participants were fully on board with the proposal, with Iraq supporting another six months of cuts, according to Falah Al-Amri, the head of the country's State Oil Marketing Organization.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so.

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Saudi Arabia and non-OPEC member Russian Federation, the world's top two oil producers, last week agreed on the need to prolong he current deal on cuts, which expires in June, until March 2018, pushing up prices. Since then, WTI has rallied up above $49 as news came out of an OPEC extension to the cuts.

"Quarterly growth of real gross domestic product (GDP) in the OECD area decelerated sharply to 0.4 percent in the first quarter of 2017, compared with 0.7 percent in the previous quarter, according to provisional estimates", the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.

Norway's oil ministry said later on Tuesday it had no plan to join cuts but had a good dialogue with OPEC.

Nigeria and Libya were granted exemptions from cuts as their output suffered from unrest.

When the oil price was trading above $49 per barrel back in April we forecasted the price to drop to as low as 443 per barrel and later extended that target to $38 per barrel mentioning the threat of deal extension as a vulnerability to the call.

Goldman said OPEC should put pressure on American shale oil producers by creating a market structure known as backwardation, when the future trading price of a commodity is below the current spot market value. Rising US shale output would further complicate matters for Opec.