Some Opec oil ministers have suggested extension of production deal is possible
All eyes are on Opec this week as the 13-state oil exporting group publishes its production figures for January, revealing to the market the extent of its agreed output cuts.
Opec will release its latest monthly figures on 13 February, which if all countries have met their targets should show a 1.2 million barrel-a-day curtailment of production.
The Paris-based International Energy Agency (IEA) estimated on 10 February that Opec has achieved an initial compliance rate of 90 per cent. Saudi Arabia, which agreed to by far the largest production cut, is said to have reduced output by more than it pledged.
Opecs own monitoring committee, which has been set up by Opec as well as non-Opec members that also agreed to cuts, is expected to announce January production estimates after 17 February.
Oil prices got an immediate boost after Opec announced its supply cuts on 30 November 2016. Brent crude has stabilised in a range of $54-$58 a barrel in the months since early December, compared with an average of $43.74 in 2016.
The Opec/non-Opec agreed cuts are set to last for the first six months of 2017. The big question is whether the players involved are prepared to extend the policy further.
Extending the agreement is an option, according to some Opec ministers. Qatars Energy Minister Mohammed al-Sada said last week at a news briefing in Doha that it is too early to make a judgement.
Irans Petroleum Minister Bijan Zanganeh said he believes the oil-exporting countries should go beyond the initial agreement. He stated that Saudi Arabia is planning to start talks on a possible extension, despite a previous statement by Saudi energy minister Khalid al-Falih that he does not expect the deal to be extended.
The US-based Energy Information Administration forecast in its February Short-Term Energy Outlook that Brent prices would average $54.54 a barrel in 2017 and $57.18 next year.