Oil prices inched modestly early Thursday with Brent crude rising 0.6% to $56.10 per barrel, amidst hints of that member-countries of the Organisation of Petroleum Exporting Country (OPEC) may consider further production cut, but gains were balanced by signs of Russian production growth.
Members of the OPEC cartel are billed to meet in May, amid expectations that African member-countries Nigeria and Libya would continue to be exempt from the deal, just as Iran has room for production growth as it seeks to regain a market share lost to sanctions.
Saudi Arabia, the largest producer and de facto head of OPEC, has cut its output more than any other and total group production is already below the 32.5 million barrels per day target.
PVM, a brokerage firm expects the May meeting could lead to an extension of the deal for another six months, though market reactions were muted as the November provision mandating the cuts already included a clause on a six-month extension.
Crude oil prices came under heavy pressure last year as markets favored the supply side, leading OPEC to intervene in an effort to restore balance. Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that OPEC cuts so far aren’t enough to reduce global supplies, “they are just enough to maintain supply about unchanged versus last year.”
Elsewhere, PVM reports that Russian crude oil exports could increase by more than 5 percent this year even as it clings to its commitments to OPEC’s managed decline agreement as a non-member participant. For other non-members, Norway, which is not party to the agreement, said job openings were on the rise in its oil and gas sector.
