Sunday 22 July 2018

Crude oil steadies as Opec strikes deal to curb output

Stock image: Reuters
Stock image: Reuters

Rakteem Katakey

Brent crude oil held near $64 a barrell after Opec agreed to extend production curbs to the end of next year, giving the market what it expected.

Futures rose 1.3pc in London. The curbs will last to the end of 2018, according to delegates at a meeting of oil producer nations' minsters in Vienna. Talks have now moved on to the mechanism that will be used to review the agreement in the middle of next year, they said.

The Organization of Petroleum Exporting Countries (Opec) is only halfway through its job of bringing oil inventories back in line with the five-year average and several ministers said an extension of its output-cut deal is essential.

Ministers also needed to get Russia, their largest non-Opec ally, on board at a meeting with other partner countries.

The nations gathered in Vienna have worked hard to assure traders of the strength of the group's continued commitment to the production cuts. Traders will still scour the final communiqué for signals any disagreements within the group have been dealt with.

"Give the market what it wants and let's take a look later if necessary," said Ole Sloth Hansen, head of commodity strategy at Saxo Bank. "Rocking the boat at the 11th hour would be very counterproductive and everyone knows that. There's mostly relief that nothing prevented the extension." (Bloomberg)

Irish Independent

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