Saudi Arabia's Falih says OPEC close to agreement on extending oil deal

Saudi Arabia's Falih says OPEC close to agreement on extending oil deal

Saudi Arabia's Falih says OPEC close to agreement on extending oil deal

Saudi Arabia said the Organisation of the Petroleum Exporting Countries (Opec) plus Russian Federation and other producers are likely to extend oil production cuts at around current levels as the kingdom did not want a fight for market share with the USA or a repeat of the price collapse five years ago.

Brent crude futures gained $1.62, or 2.6%, to settle at $63.29 a barrel.

Friday's crude trading was a repeat of past end-of-week performances, with sentiment causing West Texas Intermediate prices to to surge by 2.7 percent - but still not enough to ward off a third straight week of declines overall.

The kingdom's Energy Minister Khalid Al Falih also said Opec was close to agreeing to extend a pact on cutting oil supplies beyond June, although more talks were still needed with non-Opec countries that were part of the production deal. Supply has also been limited by USA sanctions on oil exports from Iran and Venezuela.

The number of USA oil rigs dropped 11 to 789 for the week ending June 7, US energy services firm Baker Hughes reported on Friday.

They have agreed to cut their combined production by 1.2 million barrels per day, or more than 1% of global output, from January 1 until the end of June in order to support oil prices and balance the global crude market. Drillers cut 11 rigs in the biggest weekly decline since April, bringing the total count down to 789, General Electric Co's Baker Hughes energy services firm said.

Crude prices have fallen more than 20% from the 2019-high ($66.60) as the USA imposes a 5% tariff on all goods coming from Mexico, and the current environment may keep oil under pressure as President Donald Trump pledges to implement "monthly increases as per schedule".

Prices had been near flat most of the session as sentiment remained dim on fresh signs of a stalling global economy and ongoing concerns about US crude supply growth.

US and Mexican negotiators resumed migration talks on Friday.

But some market participants were skeptical the tariffs would go into effect on Monday.

Still, OPEC is widely viewed as a band-aid and not a solution that will prevent crude from spiraling into a bear market; Tamar Essner, director of energy & utilities at Nasdaq, pointed out that "The zeitgeist of the oil market is that it wants to track the broader macro environment; a lot hinges on what the outlook for the global economy looks like, which really hinges on a trade deal" - referring to a deal between the US and China.

Because of weak economic data and the widening trade conflict, Commerzbank revised their third-quarter forecast for Brent down to $66 from $73 a barrel. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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