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Oil Mixed as OPEC, Russia Agree to Extend Oil Cut to End of 2018

November 30, 2017 at 17:44 by Andrew Moran

Oil futures are trading in the red even as Organization of the Petroleum Exporting Countries (OPEC) and Russia agree to extend crude production cap by nine months. Investors may be waiting for final details of the OPEC-led deal, including who may be exempted from the arrangement.

January West Texas Intermediate (WTI) crude futures tumbled $0.08, or 0.14%, to $57.22 per barrel at 16:31 GMT on Thursday on the New York Mercantile Exchange. US crude is on track for a two-session losing streak, but oil prices are poised for the third consecutive monthly gain after advanced roughly 5% in November.

Brent, the international benchmark for oil prices, is trading in positive territory. January Brent crude futures rose $0.27, or 0.43%, to $63.38 a barrel on London’s ICE Futures exchange. Brent crude prices will record a 4.4% monthly gain.

Reports suggest that OPEC and Russia have agreed to extend the crude output cap to the end of 2018. The agreement will consist of quarterly reviews, but other fine print matters, like who will be exempt from the deal, have yet to be made public.

Saudi Energy Minister and current OPEC President Khalid al-Falih told CNBC that an official announcement will be made at the end of the meeting in Vienna.

Consensus is almost complete. There will be a decision. We will announce it after the conference, but as we have always said, there are 24 participants and each one of them has an equal vote.

There have been concerns among traders that the agreement may not happen, or the extension would be shorter. Moreover, investors have been recommending that OPEC increase the amount of oil they would cap, which would expand market prices.

In November 2016, OPEC members and non-OPEC oil-producing nations vowed to slash their crude output by 1.2 million barrels per day (bpd) to reduce the global supply glut and help rebalance supply and demand.

On Wednesday, the US Energy Information Administration (EIA) reported that US crude supplies declined 3.4 million barrels, while domestic output reached 9.68 million bpd. Gasoline stockpiles jumped 3.6 million barrels, while distillate stockpiles surged 2.7 million barrels.

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