Crude Oil Prices Recover after a Recent Plunge, Upside is Limited

However, the current agreement allows for such a possibility, he noted. The pattern appears to be repeating, except that Saudi Arabia so far has cut production about 50 percent more than it promised, making up for much of its member countries' overproduction.

"It is premature to talk of what we will discuss in April-May. The technical possibility of the deal extension is envisaged by the agreements", Novak said.

"The announcements from OPEC over the last couple of weeks; the concerted effort to show the market that this deal that they struck in November", Love said.

The EIA reported that US commercial crude oil inventories increased by 1.5 million barrels from the previous week.

The US saw an addition of 1.5 million barrels of commercial crude oil for the week to February 24, which has increased the stockpiles to 520.2 million barrels, according to the Energy Information Administration (EIA). Stocks also continued to build in China and volumes of oil stored at sea increased.

Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan are the other non-OPEC producers party to the deal.

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Novak said Moscow was unlikely to cut more than it had already pledged if other non-OPEC producers failed to comply with their own promises.

The rise in production is consistent with the substantial increase in the number of rigs drilling for oil since May 2016. Russian Federation also reiterated that it would be sticking to the agreement between OPEC and non-OPEC producers and it would try to speed up the gradual cutting of the 300,000 bpd in order to rebalance the market.

Steady oil prices have allowed US producers to begin ramping up drilling efforts.

Rising output also helps explain the big increase in USA crude exports and the continued high level of domestic crude stocks.

Oil prices, however, have been unusually stable since producers agreed in November to reduce the oversupply that has weighed on prices for more than two years, with both Brent and US crude locked in $5 ranges.

  • Adam Floyd