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Oil producers need more time to decide on cut extension, crude drop

Kuwait, Oman, Iraq among nations backing output cut extension

Petroleumworld 03 27 2017

A pledge by crude producers to consider extending their output-cut deal failed to excite oil bulls, with prices dropping as more time was seen needed to trim swollen global stockpiles.

Futures lost as much as percent 1.3 percent in New York, after falling for a third week this month as rising U.S. supplies offset the effect of output curbs by other producers. Five OPEC nations joined with non-member Oman to voice support for prolonging cuts past June, with Kuwait saying it should be for an additional six months. Russia said it needs more time before making a decision.

Oil last week slid to the lowest since November as record U.S. stockpiles and increasing American output as well as drilling activity weighed on prices while the Organization of Petroleum Exporting Countries and other nations try to ease a global glut. A committee of ministers from Kuwait, Algeria and Venezuela and their counterparts from Russia and Oman that met over the weekend asked OPEC to review the market and give them a recommendation in April on rolling over their output reductions.

“There's a lot of impatience when we continue to see builds in inventory and growing U.S. output,” Daniel Hynes, an analyst in Sydney at Australia & New Zealand Banking Group Ltd., said in a Bloomberg television interview. “The market's definitely asking for it,” he said, referring to a deal extension.

West Texas Intermediate for May delivery dropped as much as 63 cents to $47.34 a barrel on the New York Mercantile Exchange and was at $47.48 by 8:14 a.m. in London. Total volume traded was about 10 percent above the 100-day average. Prices rose 27 cents to close at $47.97 on Friday, paring the weekly loss to 1.7 percent.

More Time

Brent for May settlement was 42 cents lower at $50.38 a barrel on the London-based ICE Futures Europe exchange. The contract gained 24 cents, or 0.5 percent, to $50.80 on Friday. The global benchmark traded at a premium of $2.90 to WTI.

Russia needs more time to assess the market, inventories and production in the U.S. and other non-OPEC countries, Russia's Energy Minister Alexander Novak said in a Bloomberg interview. The nation has cut its output by 185,000 barrels a day compared with a target of 300,000, Novak said Saturday.

Story by Ben Sharples and Perry Williams from Bloomberg.

bloomberg.com 03 26 2017

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