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OPEC May Extend Oil Product Cut for 9 Months
Oil ministers from Saudi Arabia and Russia have vowed to back a proposal by OPEC to extend its petroleum production cutback to next March.
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Oil ministers from Saudi Arabia and Russia have vowed to back a proposal by OPEC to extend its petroleum production cutback to next March. The news prompted a jump in the price of oil futures today.
Last year the Organization of the Petroleum Exporting Countries, Russia and several other oil producers agreed to trim their daily output of crude oil by about 1.8 million barrels per day through the first half of 2017. The goal was to reduce high oil inventories and thereby raise oil prices.
But OPEC says oil stockpiles have continued to climb. The cartel estimates inventories expanded 1% to 3 billion barrels—or 276 million barrels above average for the past five years—so far this year.
Oil industry analysts estimate the glut might be reduced by the end of this year if current production cuts are maintained. But that is likely only if U.S. shale producers don’t take up the slack. Bloomberg News reports that drilling activity by American shale operations has been rising for 17 consecutive weeks.
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