Oil price rises to $52; Russia & Saudi Arabia discussed the outputs in Beijing

Oil price today reached the level of $52 a barrel. Due to Russia and Saudi Arabia’s agreement on cuts. They almost definitely consider that the Supply cuts have to extend into 2018, in order to achieve the rebalance of Oil market. And to keep the OPEC-lead deal, which is crucial for the benefits of all producing countries.

In a meeting today, Khalid A. Al-Falih, and Alexander Novak agreed that supply cuts need to extend to the period of next nine months. Until march 2018, which is more than the previous 6 months considered.

The price & Beijing meeting

Brent crude rose $1.20 to $52.04 a barrel by 0847 GMT (4.47 a.m. ET) and traded intraday at $52.26, the highest since April 26.

U.S. crude was up $1.18 at $49.02 a barrel.

Oil obtained back up from this supply deal. Still, inventories remain high and output from other producers such as the United States is rising. Affecting global prices and keeping them below the $60. Saudi Arabia will definitely like to see prices above $60.

Beijing, May 15: “There has been a marked reduction to the inventories, but we’re not where we want to be in reaching the five-year average.” (Khalid al-Falih)

“We’ve come to the conclusion that the agreement needs to be extended.”(Novak)

As said many times before, OPEC agreed in 2016, on cutting the outputs for 1.8 million bpd.

The two ministers today in Beijing said they were hoping that the other producing-countries will join the cuts. So they could build a global volume terms as before.

Newspaper comments on the Beijing meeting & its subject:

Market participants, oil traders and all the other analysts, were a bit stunned by the strong sound of the announcement.

“It is certainly a strong statement to include already 2018, while it may also be aimed at improving the chances of keeping other participants on side when it comes to the next round of talks in 10 days.” (JBC Energy)

The most important meeting of all the producing countries will take part on May the 25th in Vienna. OPEC and some non-OPEC producers will agree on whether to further cut the production. OPEC invited 2 countries which are not included in recent deals, to join the meeting. Those are the two small producers, Turkmenistan and Egypt.

United States

Still, besides all the agreements and producing OPEC allies, there always exists a problem amid these deals. The U.S. drillers, non-stopping their huge outputs, are affecting the global supply (oversupply) and having a big impact on prices.

They  added oil rigs for a 17th week in a row. Expanding a 12-month drilling recovery, and making a fuss with their impacts on global market.