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

Kuwait's Oil Minister Essam al-Marzouq said on Tuesday he supported a supply cut extension until the end of March 2018, echoing suggestions from top producers Saudi Arabia and Russian Federation on Monday, according to media reports.

Saudi Arabia›s Energy Minister Khalid Al-Falih (L) and Russia's Energy Minister Alexander Novak attend a joint briefing in Beijing on Monday. Brent crude futures were at $52.05 per barrel at 0129 GMT, up 23 cents, or 0.44 percent, from their last close.

Opec, Russia and other producers originally agreed to cut output by 1.8-million barrels per day in the first half of 2017, with a possible six-month extension.

The two countries produce 20 million barrels of crude oil a day - about one-fifth of global consumption - and other oil-producing nations are expected to follow their lead over cuts.

Oil has gained support from the deal but inventories remain high and rising output from other producers, such as the USA, is keeping prices below the $60 that top exporter Saudi Arabia would like.

Russian Federation and Saudi Arabia, the largest of the 24 producers that agreed to cut output for six months starting in January, are reaffirming their commitment to the deal amid growing doubts about its effectiveness.

At the end of April, the "longs" got exhausted of waiting for the cartel's production cuts to tighten the oil market and they started closing their positions.

"We've come to conclusion that the agreement needs to be extended".

On Monday, Russian and Saudi energy ministers said in a joint statement that Moscow and Riyadh meant to propose a 9-month extension of the current Vienna agreement on oil output cuts on the existing conditions at the OPEC ministerial meeting in late May.

According to Novak, extending the agreement exactly for 9 months will help with a longer-term market forecast and give a greater certainty in terms of market recovery.

Oil prices hit a three-week high after the announcement, while shares of oil majors Exxon and Chevron were up 1 percent in premarket trading.

But, this would depend on how much low-priced U.S. shale producers would raise production.

Since Saudi Arabia chose to flood the market with oil in mid-2014, the Saudi Arabian International Reserves Fund has declined by over $200US Billion.

"That said, we are skeptical about Russia's willingness to actively participate in any extended cuts".

Oil prices continue growing. United States oil production has risen by 10% over the a year ago.

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