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Mexico says supports OPEC cuts as way to stabilise oil market

24 May 2017

The Organization of Petroleum Exporting Countries' second-largest producer, which only reluctantly agreed a year ago to cut output, had previously favored prolonging the supply cuts by just six months.

Pradhan also said OPEC producers should work towards a "responsible price" for oil and Asia should be treated on a equal footing with Western consumers.

The budget, which will be delivered to Congress on Tuesday, is meant as a proposal and may not take effect in its current form.

Saudi Energy Minister Khalid al-Falih said earlier that all participants of the deal have already given a preliminary consent to the extension of the production cut until end-March 2018.

usa light crude CLc1 was up 10 cents at $51.23.

West Texas Intermediate for June delivery, which expires Monday, rose 43 cents, or 0.9 percent, to $50.76 a barrel at 1o:29 a.m.

But this Thursday's frenzy could be even fiercer than usual as Opec-watchers say there's a potential surprise in store.

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Prices have been lifted by expectations that a pledge by Opec and other producers, including Russian Federation, to cut supplies by 1.8 million barrels per day (bpd) would be extended to March 2018, instead of covering just the first half of this year.

OPEC's largest producer, Saudi Arabia said on Sunday that most members are agreeable on extending the output cut in the face of the global supply glut. "Going to Iraq to shore up support and push not just for six months but to push for nine months is getting the attention of the market", said John Kilduff, founding partner at energy hedge fund Again Capital.

Some analysts argue that deeper cuts are required to balance the market, but note the cuts so far have stimulated U.S. energy companies to boost shale production.

The plan calls for sales to rise gradually, which would tend to pressure prices for oil delivered further in the future, making the contracts cheaper than those at the front of the futures curve. The Iranian oil minister, Bijan Zanganeh, has spoken little in recent weeks other than to voice general support for an extension, though Iran has in the past argued it should be allowed to return to the production level before nuclear sanctions were imposed, of more than 4m bpd.

He said that he expects there will be a bigger reduction in world oil inventories in the second half of this year, but that the target is to bring those stocks down to the historical five-year average, which is still some way off.

As per available data, the Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on Friday at $52.30 for a barrel of 159 litres, which was higher than the previous day's close at $51.28. USA production has already jumped 500,000 bpd to 9.3 million since Saudi Arabia started to discuss the cuts in late-2016.