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Oil stable on expectations of extended OPEC-led production cut

Published 15/05/2017, 11:26 am
© Reuters.  Oil stable on expectations of extended OPEC-led production cut
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* Saudi, Russian energy ministers to meet Mondy in Beijing

* Soaring U.S. oil output weighs on market

By Henning Gloystein

SINGAPORE, May 15 (Reuters) - Oil prices held steady on Monday, supported by expectations that OPEC and Russia have agreed to extend a production cut beyond the first half of this year.

However, another rise in U.S. drilling activity weighed on markets.

Brent crude futures LCOc1 , the international benchmark for oil prices, were at $50.86 per barrel at 0125 GMT, little changed from their last close at $50.84.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $47.88 per barrel, also little changed from the last settlement at $47.84.

Analysts said that the market was supported by an expectation that the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have agreed to extend an agreement to cut output by almost 1.8 million barrels per day (bpd) beyond the initial period of the first half of the year.

"The news that OPEC has tentatively agreed to rollover the production cut agreement should provide some support to oil prices this week," ANZ bank said on Monday.

Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak are scheduled to meet in Beijing on Monday to discuss oil output policy.

Russia is the world's biggest oil producer, while Saudi Arabia is the biggest exporter.

Together, they control around 20 million bpd in daily output, equivalent to a fifth of daily global consumption.

However, a relentless rise in U.S. drilling activity is undermining efforts by OPEC and Russia to prop up the market.

U.S. energy firms have added oil rigs for a 17th week in a row, extending a 12-month drilling recovery that is expected to help boost crude production in the United States to a record high next year.

Current U.S. production is at 9.3 million bpd C-OUT-T-EIA , up more than 10 percent since its mid-2016 trough.

Drillers added nine oil rigs in the week to May 12, bringing the total count up to 712, the most since April 2015, energy services firm Baker Hughes BHI.N said on Friday. RIG-OL-USA-BHI

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