After OPEC deal, Texas oil regulator boasts of victory

The agreement, which is expected to be ratified later today by Russian Federation and other producers outside Opec, will see the 1.8 million barrel a day accord first agreed in late November extended to March 2018.

Oil is significantly lower Thursday on the news, with both major benchmarks lower by more than 3%. Since then, trading has been volatile.

Opec's cuts have helped push oil prices up, giving a fiscal boost to oil producers. OPEC's move was greeted by a sell-off.

There is also talk that OPEC is looking at the option of deepening current production cuts, but it is not clear whether there would be support for that.

"It's all gone as expected", Bob Yawger, director of the futures division at Mizuho Securities USA NY, said by telephone.

Oil fell prices fell as the meeting opened.

"Today the bottom evaporated from the market", he said.

OPEC and key allies last November agreed to remove 1.8 million barrels per day from global markets.

The Joint Ministerial Monitoring Committee - comprised on six OPEC and non-OPEC nations - has a strong mandate to continue watching the market and can recommend further action if needed, said his Kuwaiti counterpart Almarzooq.

A preliminary deal among OPEC nations to extend the supply curbs by nine months would be put to representatives of non-OPEC producers later Thursday, an OPEC source said.

"Nurturing a constructive and stable market environment is our highest priority", said Khalid Al-Faith, Saudi Arabia's minister of energy and president of the OPEC conference on Thursday.

There's even speculation that there may even be an agreement for deeper cuts.

"A nine-month extension would have little impact on our price forecast for 2017, which is for an annual average of $55 per barrel for Brent", the report read.

The goal is to siphon off a global oversupply of oil caused by a flood of production from US shale producers and record levels of output from OPEC itself in 2016. That has had a growing effect on global supplies. OPEC members typically do not comply with quota agreements, and United States shale producers are likely to continue flooding the market, according to Tortoise Capital Advisors.

But since fracking required substantial investment, when oil prices plummeted in 2015 and 2016, output from shale in the United States fell around 900,000 barrels a day, equivalent to nearly 1 per cent of the global supply. Its production reduction of 1.2 million bpd was made based on October 2016 output of around 31 million bpd, excluding Nigeria and Libya.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in USA shale oil output.

"If U.S. shale producers exceeded our projected increases, it'll drive the price down again", Arrington said.

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