Oil Rises After OPEC Deal Extension Comments

May 8, 2017 Share Print 0

Oil rose on Monday, reversing earlier losses, after sources said OPEC and its partners were considering extending their existing supply deal possibly into next year, which helped offset the bearish impact of more increases in U.S. crude output.

Brent crude was up 34 cents at $49.44 a barrel at 1410 GMT, having recovered from a session low of $48.65. U.S. light crude was up 35 cents at $46.57 a barrel, up from an intraday low of $45.83.

Industry sources and sources in OPEC said the group and its non-OPEC partners were considering an extension to the current deal, which comprises an output cut of 1.8 million barrels per day (bpd), for nine months or more.

The efforts of the Organization of the Petroleum Exporting Countries to reduce global oil inventories have been undermined by a surge in U.S. drilling, which has knocked more than 10 percent off the price of oil in the last month.

OPEC meets on May 25, when it is expected to discuss prolonging the cuts to the end of 2017, although analysts say a further extension may not be enough.

“The market is in a very dangerous condition,” said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates. “The trend is still down, but just correcting.”

via Reuters

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.