Oil prices build on gains on expectation of extended crude supply cut

People are reflected in a display showing the current exchange rate between U.S. dollar and Japanese Yen outside a brokerage in Tokyo

"Whatever it takes." That was the sentiment expressed by the Saudi energy minister Khalid al-Falih this week when he, along with the Russian energy minister Alexander Novak, committed to extending production cuts through March of next year to help eat away at the global oversupply of crude.

Russian Federation and Saudi Arabia said Monday they want to extend oil production cuts through the first quarter of 2018, in a move the two major producers say would support the market price.

Opec, Russia and other producers originally agreed to cut output by 1.8-million barrels per day in the first half of 2017, with a possible six-month extension.

Extending the curbs at already agreed-upon volumes is needed to reach the goal of reducing global inventories to the 5-year average, the energy ministers of the world's biggest oil producers said in a joint press conference.

The global benchmark for crude oil was up $1.35, of 2.7 percent on the day, at $52.19 a barrel on the news.

Under the current agreement that started on January 1, the 13-country OPEC and other producers pledged to cut output by nearly 1.8 million barrels per day in the first half of the year. Their announcement sparked a rally in oil prices, which had sagged on signs the cutbacks made so far haven't significantly depleted the world's brimming fuel inventories.

Modi-conomics ; how people responded to government after three years in power
On overall rating, people's support for the government has declined from 64 per cent last year to 61 per cent this year. Incidentally, 38 per cent people previous year gave credit to the government for keeping the prices down.

USA bank Goldman Sachs said the deal would likely extend the oil price rebound "although the rally so far. has remained modest compared to the move that occurred previous year when the OPEC cuts were first announced". However, concern that the deal may not go far enough to tackle the glut of oil still dragging on the market caused prices to tumble back below $50 a barrel in recent weeks.

USA energy firms added oil rigs for a 17th week in a row, extending a 12-month drilling recovery, energy services firm Baker Hughes Inc said on Friday.

USA production is now forecast to average about 9.31 million bpd this year - a level reached already, according to government figures.

Borneo Oil Bhd pared gains after rising to 19.5 sen earlier to trade unchanged at 19 sen, with 12.7 million shares changing hands for a market capitalisation of RM575.5 million.

In its monthly oil market report, the Paris-based group noted Libya has raised oil production to 800,000 barrels a day, the highest point in three years, according to its preliminary data.

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