OPEC likely to extend output cuts into next year

July West Texas Intermediate crude rose 34 cents, or 0.7%, to settle at $51.47 a barrel after taking over as a lead contract at Monday's close.

The current cuts, an output reduction of 1.8 million barrels per day for six months, were decided in November and implemented on January 1.

Saudi Arabia and non-OPEC Russia have been pushing to extend the cuts from the end of June until March 2018.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so.

Oil ministers from OPEC and non-member producers meet on Thursday in Vienna.

Saudi Energy Minister Khalid al-Falih noted a "trend" among participants to prolong the cuts for nine months.

Marzouq also said Saudi Arabia had talked to three oil producers which have not so far joined the cuts - Turkmenistan, Norway and Egypt - and all three had signalled willingness to join.

Reportedly, a nine-month extension is under consideration, with Iraq - an OPEC member that has been hostile towards production curbs - apparently open to the idea.

The 167th meeting was preceded by a near linear drop in prices among top US exchange-traded oil stocks.

The decline went further than the Saudis had anticipated, and other Opec members seemed to be collateral damage as a outcome of their move, with devastating effects on countries like Venezuela.

"The other two are much less likely though, I would give the nod to a deeper cut versus abandoning all together", he added.

"Oil prices rebounded last week despite the continuing overhang of growth in U.S. oil production", says Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

On Monday, OPEC's de-facto leader Saudi Arabia gained support from the second largest producer in the cartel, Iraq.

From a fiscal perspective, the proceeds stay dependent on the oil price forecast, with the proposal being inconsistent with the Energy Information Administration's long term price projections, according to Goldman.

The White House proposal would also open areas of Alaska's arctic region to exploration, potentially helping the United States further boost production to rival top competitors Saudi Arabia and Russian Federation.

Meanwhile, the Opec is still debating whether to extend oil output cuts by six or nine months, UAE Minister of Energy Suhail bin Mohammed Faraj Al Mazroui said.

Brent crude settled up 28 cents at $54.15 per barrel.

Although the figure is equivalent only to the output of a mid-sized field, it sends a powerful signal about the United States' decreasing need for imports as its own production reaches new highs.

"Production cuts cause higher prices which will incentivize more production for the USA shale oil and reduce the impact of the production cuts".

Overall, markets will be expecting a 9-month extension of output cuts at the current rate.

Commerzbank cited data from the U.S. Department of Energy saying U.S. production was roughly 540,000 barrels per day higher in mid-May than at the start of the year.

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