OIL PRICES ANALYSIS
BLOOMBERG - Oil declined in New York as traders await further proof that OPEC-led production cuts, extended at a meeting last week, are having an effect.
West Texas Intermediate futures were down 0.8 percent from Friday's closing price following the U.S. Memorial Day holiday on Monday. OPEC and Russia's deal to extend output limits through March was initially met with a sell-off as deeper cuts or a plan for the rest of 2018 weren't proposed. Saudi Arabia's Energy Minister Khalid Al-Falih said the strategy is working and stockpiles will drop faster in the third quarter.
Oil has traded below $50 a barrel since last week as the Organization of Petroleum Exporting Countries and its allies agreed to extend an output-reduction deal, yet no new non-OPEC countries joined the pact. U.S. crude inventories have dropped for seven weeks in a sign the limits may be working, though stockpiles are still above the five-year average. Saudi Arabia plans to reduce exports to the world's biggest consumer to speed up that decline.
"The market was hoping we would get somewhat deeper cuts," said Bart Melek, the head of global commodity strategy at TD Securities in Toronto, in a telephone interview. "There was also chatter surrounding a few other producers joining into the agreement and there was hope expressed that there would be a plan beyond 2018."
West Texas Intermediate for July delivery slipped 39 cents to $49.41 a barrel on the New York Mercantile Exchange as of 10:34 a.m. in New York. There was no settlement Monday because of the U.S. Memorial Day holiday.
Brent for July settlement dropped 65 cents, or 1.2 percent, to $51.64 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $2.23 to WTI.
Russian Energy Minister Alexander Novak and Saudi Arabia's Al-Falih discussed the oil market and cooperation between countries in Moscow on Tuesday, the Russian ministry said on its website. Russian President Vladimir Putin and Saudi Arabia's Deputy Crown Prince Mohammed bin Salman hailed a new period of close relations at talks in Moscow. The agreement to curb oil production is very significant and "our coordinated actions helped stabilize the situation on the world hydrocarbons market," Putin said Tuesday at the Kremlin meeting.
"OPEC has done enough to establish a floor, but at this stage the best they can probably hope for is to see oil hold around these levels," said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen. "We are in a wait-and-see mode. Major fund buying will only be seen once data begins to support."
Goldman Sachs Group Inc. cut its 2017 Brent forecast to $55.39 a barrel from $56.76 and reduced its WTI forecast to $52.92 from $54.80, according to a report.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.