It was last week that an announcement was made regarding the nine-month extension of the production cut by Saudi Arabia and Russia. This announcement is being supported by all the countries. Moreover, this announcement also had the oil prices recovering.
In an announcement last week, it was said that Saudi Arabia and Russia will extend the production cut until March 2018. Speculations led the oil prices to recover and it is also suggested that till the OPEC meeting is held next week, oil prices will see an upward move, Economic Times reported.
Notably, on Thursday, OPEC and non-OPEC countries will meet in Vienna to approve the rollover. So far, almost all the countries have shown their support for the agreement, even though some have certain reservations, stated Noureddine Boutarfa, the Algerian Energy Minister, in an interview.
According to reports from Bloomberg, this extension is an attempt to bring up the prices of oil. The oil producers are trying to resuscitate the economy with such measures. Notably, prior to this announcement, the market was moving at a slow pace, which led to the liquidation of the long positions.
Reports suggest that the main concern is the fact that the reduction in the OPEC production is being taken care of by the non-OPEC output from the United States. It is also suggested that in the times to come, the non-OPEC supply will see an upward rising graph as it is forecasted that in 2017 the supply will see a growth of 0.95 mbpd. This is largely due to the bounce back in shale oil production in the United States.
OPEC does have a tough job ahead, especially since shale can shale oil can make a come back very fast. Now, it remains to be seen, how things turn up after the meeting on Thursday.