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Saudi oil minister says production cuts may need to continue

Saudi oil minister says production cuts may need to continue

Oil prices regained some ground on Thursday, after steep losses in the previous session, as leading Gulf oil producers signalled a likely extension of OPEC-led supply cuts beyond the middle of the year.

Front-month Brent crude futures were at US$53.07 per barrel at 0642 GMT, up 8 United States cents from their last close, but on course for a 5% weekly drop, the most since the week of March 10.

Crude futures edged lower on Friday, with investors focused on the US, where production is growing faster than had been anticipated.

Saudi Energy Minister Khalid al-Falih said that oil-producing countries might have to prolong output cuts agreed for the first six months of the year, explaining: "We might have to extend in order to reach the target... of stock levels".

The accord has lifted oil prices, which are near US$55 a barrel. He has a deep understanding of market fundamentals and the impact of global events on capital markets. "And what we agreed with our partners, countries that are outside OPEC, was an important agreement". For this week, the gasoline stock-build has outweighed optimism over the output cuts guiding the market back into equilibrium, helped by a longer-term n bearish shadow being cast on the oil market by a potential surge in USA production.

Markets have started in muted fashion for much of the week, only to be followed by declines once investors digest the latest metrics gauging supply and demand.

He pointed to elevated crude stocks as the main reason for oversupply.

"Everything was really shaky today as people are afraid to get in before the expiration", said Phil Flynn, senior market analyst at Price Futures Group, referring to the four-day losing streak.

Among the other things that could affect supply and prices is the re-growth of shale oil production in the U.S. and President Donald Trump's vow to promote more oil drilling in the country.

The need to extend the agreement, which was planned to cut off some 1.8 million bpd from global supply, became evident before the end of the first quarter, when it emerged that instead of declining, global supplies had actually increased.

The minister said last week Russian Federation will cut its crude oil production by 300,000 barrels per day (bpd) by the end of April as agreed with other major producers.

Gasoline futures recently fell 1.2% to $1.65 a gallon and diesel futures fell 1.8% to $1.5502 a gallon. The U.S. inventory data released the same day was "in line with expectations", and the slide accelerated as prices traded through their 50- and 100-day moving averages, the bank said.


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