Oil tumbles 4% as OPEC confirms production cut extension to April 2018
The Organization of Petroleum Exporting Countries (OPEC) confirmed on Thursday that both the cartel and non-OPEC members led by Russia have agreed to extend its output cut agreement for another nine months and expect to reach supply target by the end of 2017.
OPEC president and Saudi Arabia’s energy minister Khalid Al-Falih said that oil producers had discussed the length of the extension as ranging from six to 12 months but decided that “the nine month (extension) is the optimum”.
Al-Falih admitted that they also discussed even higher production cuts but that they felt that current levels were sufficient to “reach the five year average by the end of the year” and expected to reach target before year-end.
He explains that the extension was made through the end of March 2018 simply to “avoid the typical seasonal stock build”.
As the press conference continued, crude widened earlier losses, sinking more than 4%, compared to a little over 3% before Al-Falih began speaking.
As of 12:14PM ET (16:14GMT), U.S. crude futures tumbled 4.50% to $49.05 by, while Brent oil sank 4.24% to $51.67.