Saudis, Russia Commit To 9-Month Oil Cuts, Goldman Sees $57 Price

Saudis, Russia Commit To 9-Month Oil Cuts, Goldman Sees $57 Price

The fall in production from Iraq could support crude oil (ERY) (ERX) (PXI) (UCO) prices. The worldwide Brent oil benchmark was up 3% to $52.33 per barrel this morning, and the U.S. West Texas Intermediate price was up more than 3% to $49.36.

Saudi Arabia and Russian Federation have agreed to extend crude oil output cuts until March 2018 in their latest effort to rebalance the global crude market, energy ministers for the two major oil producers said on Monday.

The U.S. benchmark ended Monday's session with gains of $1.01, or 2.1%, after hitting its highest since April 28 at $49.66.

Amid the cutbacks, production in the US, which isn't part of the agreement, has risen to the highest level since August 2015.

Oil halted gains near $48/bbl after USA rigs targeting crude rose a 17th week, countering a report that OPEC and other major producers reached an initial agreement to extend output cuts.

"Iraq is with the continuation of a reduction of oil production of OPEC nations and we will push in that direction", Abadi said in a news conference broadcast on state TV.

At the end of November, the Organization of Petroleum Exporting Countries (OPEC) agreed to cut output by 1.2 million barrels per day (mb/d) from January 1, initially for a period of six months.

More countries have been invited to the meeting of OPEC and its partners to be held May 24-25, according to Novak.

The Saudi-Russia announcement on Monday will probably extend a price rebound that began last week, though the rally is "modest" compared to the increase when OPEC cuts were first agreed to late past year, Goldman Sachs analysts said in a report.

Oil traders were surprised by the strong wording of the announcement, though it remained to be seen whether all countries participating in the deal would agree with the Saudi-Russian stance.

While the curbs by producers are working, "we are not where we want to be" in bringing global inventories down "gently" below the five-year average, Al-Falih said. U.S. oil production has risen by 10% over the previous year.

Nigeria, which now pumps about two million barrels of oil per day, is seeking to be exempt from the new OPEC deal, which would be considered at the next ordinary meeting in Vienna. The original goal of the OPEC-led cuts was to raise prices to around $60, but the reality is that $55 Brent may be the best that the cartel and its customers can do.

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