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Crude oil futures largely stable after OPEC meeting

https://www.chemnet.com   Mar 19,2019 S&P Global Platts
Crude oil futures were largely stable during mid-morning trade in Asia Tuesday, after the OPEC meeting left the market with little clarity on the duration of the supply cut agreement.

At 10:05 am Singapore time (0205 GMT), ICE May Brent crude futures inched up 3 cents/b (0.04%) from Monday's settle to $67.57/b, while the NYMEX April light sweet crude contract ticked down a cent/b (0.02%) to $59.08/b.
OPEC and 10 non-OPEC allies led by Russia agreed in December to 1.2 million b/d of production cuts from January through June.

OPEC and its allies are not likely to decide whether to extend their oil production cuts until June, close to their scheduled expiry, Saudi energy minister Khalid al-Falih said Monday.

Falih, OPEC's de facto leader as energy minister of the organization's biggest producer, said any production cut decision would be guided by market needs.

The 24-country OPEC/non-OPEC coalition were scheduled to meet in Vienna over April 17-18 to further discuss on their production strategies.

"The consensus from the bilateral [meetings] I had yesterday[Sunday] and this morning [Monday] is that April will be premature to make any decisions for the second half [of 2019]," Falih told reporters. "It seems there is a consensus building towards making a decision in June [and] we need to reconsider a need for the April meeting."

Although there was lack of clarity on whether the OPEC-led cuts would extend beyond the second half of 2019, the group continued to remain committed in reducing output up until June 2019.

"Khalid Al-Falih said that OPEC+ compliance would hit 100% in March as other producers quickly reach their agreed quotas. Russia, a producer who has been dragging its heels on cutting output, is expected to cut by 228,000 b/d by the end of the month," ANZ analysts said in a note.

However, some analysts noted that for crude prices to recover further, OPEC and its allies will require to cut more output over a longer term.

"Given that supply curbs by OPEC+, accentuated by unplanned outages in output, have already exploited the low-hanging pick-up in crude prices, OPEC+ must dig in a lot deeper (example: longer and deeper cut) to be able to boost prices further," Vishnu Varathan, senior economist at Mizuho Bank said in a note Tuesday.

Meanwhile, US commercial crude stocks for the week ended March 15 were expected to have increased by 1 million barrels to 450.1 million barrels, according to analysts surveyed Monday by S&P Global Platts.

Total gasoline and distillate stocks each likely dipped 2.1 million barrels to around 244 million barrels and 134.3 million barrels, respectively, analysts surveyed said.

Market participants would be looking out for preliminary reports on last week's US inventory levels, due for release from the American Petroleum Institute later Tuesday, and the more definitive numbers from the US Energy information Administration due later Wednesday, analysts said.

As of 0205 GMT, the US Dollar Index was up 0.57% at 95.93.
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