Ministers from Opec and non-Opec countries have discussed extending cuts on production for another six months beyond June, in an effort to keep oil prices from falling further.
In December, the Opec and non-Opec producers agreed to cut oil output by 1.8 million barrels per day for six months to cut swelling inventories and balance the supply demand equation, a move that resulted in a price recovery.
Prices of Brent crude only a few weeks ago were threatening to break $60, but began to fall following reports last week of a growing surplus, due largely to surge in American shale oil. The renewed call to keep a cap on production comes as Brent crude prices approach the keenly-watched $50 per barrel mark.
The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), who were meeting in Kuwait, said in a statement that “Certain factors, such as low seasonal demand, refinery maintenance, and rising non-OPEC supply, have slowed down the positive impact of the production adjustments on inventory drawdowns,” the statement said.
The statement further said that group would “... review the oil market conditions and revert to the monitoring committee in April 2017 regarding the extension of the voluntary production adjustments... in order to ensure market stability.”
Analysts said the oil producers have no other choice than talk about cutting more output.
“This was frankly the only option Opec had on the table. With Brent crude trading close to and in danger of breaking below $50 verbal intervention was once again required,” said Ole Hansen, head of commodity strategy at Saxo Bank.