OPEC extends agreement on oil production cut, Kazakhstan holds back

    OPEC countries have decided to extend the agreement on oil production reduction by the end of March 2018, Kuwait's Oil Minister Essam Al-Marzouk said before the start of the meeting with participation of non-OPEC countries.
    "Yes," he answered to the corresponding question from TASS.
    Extension term of OPEC deal on cutting oil production is not important for Russia, Russian Energy Minister Alexander Novak told journalists.
    "For Russia, 9 months are not essentially important for Russia. In any case we will have the opportunity to make a decision," the Minister said.
    Equatorial Guinea has been accepted as a new member of the Organization of the Petroleum Exporting Countries (OPEC), according to the Minister of Energy, Industry and Mineral Resources of Saudi Arabia Khalid Al-Falih.
    Earlier Khalid Al-Falih told reporters that a new member in the cartel will contribute an "insignificant change" to the distribution of quotas to reduce oil output.
    "The share of the reduction will extend to them," he said.
    The minister also said that Turkmenistan and Egypt, that earlier indicated their intention to join the deal, will not take part in the negotiations this time.
    Until May 25, OPEC had 13 members, including Saudi Arabia, Iraq, Iran, the United Arab Emirates, Kuwait, Algeria, Qatar, Venezuela, Ecuador, Nigeria, Libya, Angola and Gabon. Before November 2016, the cartel also included Indonesia, but its membership was suspended, as the country did not comply with the status of a net oil exporter.
    OPEC and its allies came one step closer to agreeing to extend their oil supply deal after a ministerial committee recommended another nine months of cuts.
    The Joint Ministerial Monitoring Committee — composed of six OPEC and non-OPEC nations — agreed in Vienna on Wednesday to support an extension through March 2018, according to a statement on the producer group's website. That added to the backing for another nine months of cuts from the most influential participants in the deal, including Russia, Saudi Arabia and Iraq.
    The Organization of Petroleum Exporting Countries and 11 non-members agreed last year to cut output by as much as 1.8 million barrels a day. The supply reductions were initially intended to last six months from January, but the slower-than-expected decline in surplus fuel inventories prompted the group to consider an extension. U.S. crude futures have rebounded by about 13 percent from a five-month low since Saudi Arabia first proposed maintaining the curbs into 2018.
    "A nine-month extension is effectively a done deal, but because Russia and Saudi Arabia announced their support for it earlier in the month, the market may be disappointed if Thursday's meeting ends with 'just' a nine-month extension, and prices may sell off," Amrita Sen, chief oil market analyst at Energy Aspects Ltd., said in Vienna.
    Brent crude oil for July settlement rose 0.4 percent to $54.35 a barrel at 3:26 p.m. on the London-based ICE Futures Europe exchange.
    The committee discussed several scenarios for the cuts before settling on nine months, delegates said. Prior to the meeting, ministers had also mentioned the possibility of an additional six months, 12 months or even curbs extending through the whole of 2018. The committee didn't discuss deeper cuts and will continue to monitor the market regularly, delegates said.
    Oil officials from the 24 nations participating in the deal meet in the Austrian capital Thursday to finalize their agreement. Ministers will discuss the committee's recommendation then, United Arab Emirates Oil Minister Suhail Mohammed Al Mazrouei said in an interview with Bloomberg television.
    Kazakhstan presents one potential complication to those talks. The third-largest non-OPEC participant in the agreement pumped 1.76 million barrels a day in April, overshooting its target of 1.68 million, OPEC estimates show. The country's Energy Minister Kanat Bozumbayev said he will seek to renegotiate the cap on its output before agreeing to an extended deal.
    OPEC and its allies will probably agree to prolong their agreement until the end of the first quarter of 2018, Gary Ross, global head of oil at PIRA Energy Group, part of S&P Global Inc., said in an interview in Vienna on Wednesday.
    The crude market is now starting to rebalance in earnest, but it will take time and the bulk of stockpile draws will come between June and September, Ross said. OPEC will achieve its stated aim of bringing fuel inventories back in line with the five-year average by the end of this year, said Venezuelan Oil Minister Nelson Martinez.
    Cooperation between OPEC countries and the countries outside the cartel will continue beyond the agreement on reduction of oil production, Russia’s Energy Minister Alexander Novak said at a press conference following the meeting of the ministers of the oil producing countries.
    "Cooperation between OPEC countries and non-OPEC countries will continue, and we will cooperate not only as part of those goals for balancing the market, but also in a bilateral and multilateral formats," he said.
    "We discussed this today at the ministerial committee," he added.
    The meeting of OPEC and the countries outside the cartel has ended in Vienna, the result is good, UAE Energy Minister Suhail Mohammed Faraj Al Mazroui said.
    "A very good result," the minister said, leaving the secretariat building. He did not answer questions about the essence of the decision.
    Few more countries outside OPEC may join the agreement on oil production freeze at the next meeting, scheduled for November, Minister of Petroleum of Ecuador Carlos Perez told journalists.
    "New countries outside OPEC may join at the next meeting in November," he said but refused to name the countries. OPEC ministers and countries outside OPEC discussed impact of US shale mining at the meeting, he added.
    The minister said convenient oil price for OPEC is between $55-60 per barrel.
    The next meeting of OPEC and the countries outside the cartel will be held on November 30, 2017, the Nigerian Oil Ministry reports.
    "The approved date for the 173^rd meeting of OPEC and the third meeting with non-OPEC countries is November 30, 2017," the statement said.
    Saudi Oil Minister Khalid al-Falih said that OPEC expects Turkmenistan and Egypt to join the oil output cut deal.
    Oil stocks will decline to five years average by the end of the year, he added.
    By Wael Mahdi, Angelina Rascouet and Elena Mazneva for Bloomberg, Tass.