Oil prices rise Tuesday as expected decision to extend cuts nears

"There are no fast solutions to end this situation, and the only solution possible is to let oil prices work their way" to clear the oversupply, Al-Husseini said from the Saudi city of Dhahran.

Iraq and Iran were the main stumbling blocks for OPEC in reaching its last output-cutting decision in December.

The US oil production also soared by 10% or almost 900,000bpd, since the middle of a year ago to touch 9.3 million bpd.

"Iraq agrees with Saudi Arabia's position on extending the agreement to reduce oil production for an additional nine months", the Iraqi minister announced on May 22. The supply reductions were initially meant to last six months from January, but the slower-than-expected decline in surplus fuel inventories prompted the group to consider an extension.

There's still concern that a surge in usa production, together with an increase in Libyan output and signs of recovery in Nigeria, may undercut the Organization of Petroleum Exporting Countries' strategy to stabilize the market and prop up prices.

OPEC, led by Saudi Arabia, and other participating producers meet on May 25 and are expected to extend a pledge to cut output by 1.8 million barrels per day (bpd), possibly until March 2018.

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Pradhan further said that OPEC should treat its Asian market as major markets.

U.S. President Donald Trump's proposal to sell 270 million barrels of oil from the U.S. petroleum reserve could have the unintended outcome of actually helping OPEC rebalance global petroleum markets. US crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day, close to levels from top producers Russian Federation and Saudi Arabia.

"A harsh reality may emerge, likely well after the May 2017 meeting, that the price at which shale can grow quickly could be much lower than the price OPEC members want and need", said Jamie Webster at the Center on Global Energy Policy at Columbia University. "I am not too sure", he said in Houston.

Either way, analysts said that a cut has been priced into the market. "As the year progresses if the cut can be implemented successfully, then one would expect oil prices to rise perhaps to a $55 - $60 range rather than a $50 - $55 range", he argued. Nigerian production is also recovering from the attacks as Lagos' officials meet with residents of the Niger Delta to discuss infrastructure improvement and revenue sharing opportunities.

PVM said if USA imports in coming years matched those of 2016, the country would need to keep 489 million barrels of oil in the SPR, some 140-150 million barrels above the proposed new level.

Non-OPEC member Kazakhstan has said it would struggle to join any new deal on the old terms, as its own output was set to jump while two other non-OPEC nations Oman and Mexico confirmed their support for a nine-month extension.

  • Sonia Alvarado