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Oil prices rise as expected decision to extend cuts nears

Last November, major oil producers agreed to cut output as a response to the global supply glut that had been pushing down prices for almost two years.

He however added that the production cut be increased from the current 1.8 million barrels per day, hinting that "small oil producing countries" who were excused from the initial deal be made to participate in the new deal.

Iraq has agreed to a nine-month extension of a production cut pact among OPEC members that is aimed at boosting crude prices, the country's oil minister said on Monday.

Saudi Arabia's energy minister, Khalid Al Falih, and Alexander Novak, his counterpart from Russian Federation, the main non-Opec partner, have been lobbying for an extension through March 2018 on the grounds that the policy is working, albeit slowly.

As the shale producers were able to reduce their breakeven drastically, they are likely to remain as a dominant force in the global oil market not only for months but years to come.

Benchmark Brent and usa light crude prices were broadly flat at 1230 GMT, having recouped earlier losses of around 1 percent.

Anas Alhajji, an independent oil analyst and economist, said: "It will complicate the OPEC efforts to stabilise the market".

West Texas Intermediate for June delivery, which expires Monday, rose 43 cents, or 0.9 percent, to $50.76 a barrel at 1o:29 a.m.

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Brent futures traded 1 percent up around $54 a barrel on Monday at 1455 GMT.

The low price, close to just $25 per barrel in early 2016, had battered the finances of all producers, not just stricken Venezuela but even rich-as-Croesus Saudi Arabia.

Pradhan acknowledged that OPEC's production cuts are an attempt to stem the crude price slide, but said he was anxious that it could result in under-investment in the energy sector and push prices up in the long run. US production has already jumped 500,000 bpd to 9.3 million since Saudi Arabia started to discuss the cuts in late-2016.

Deutsche Bank said the market had priced in a nine-month extension.

Non-OPEC member Kazakhstan has said it would struggle to join any new deal on the old terms, as its own output was set to jump. Surely such aggressive cuts should have produced more results?

Pradhan pointed out that "for a long time OPEC subsidised western buyers at the cost of Asian buyers", and said India is the only big economy where the demand for crude oil continues to rise each year. Nigerian production is also recovering from the attacks as Lagos' officials meet with residents of the Niger Delta to discuss infrastructure improvement and revenue sharing opportunities.

There's still concern that a surge in US production, together with an increase in Libyan output and signs of recovery in Nigeria, may undercut the Organization of Petroleum Exporting Countries' strategy to stabilize the market and prop up prices.

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