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Oil prices stabilise as Riyadh indicates output cut extension


Brent crude futures were at US$49.48 per barrel at 0652 GMT, up 38 United States cents, or 0.75%, from their last close.

Meanwhile, the price for June futures of West Texas Intermediate (WTI) has grown by 0.44 percent and stood at $46.56 per barrel.

OPEC members are slated to meet later this month in Vienna to discuss the agreement that, along with participation from Russian Federation and other non-member producers, has taken 1.8 million barrels of crude from the market each day since the beginning of the year.

"We need to see the OPEC/non-OPEC deal extended to 2018, otherwise there's a risk oil prices will fall below $40", Alexandre Andlauer, an analyst at AlphaValue SAS in Paris, said by email.

Saudi Arabia expects to extend until the end of 2017 the OPEC-led deal struck at the beginning of the year which cut oil output.

"The market is in a very unsafe condition", said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates. This is the first time the Saudi minister has suggested curbs could be extended beyond 2017. "It's never possible to call a bottom, but I suspect this is a great buying opportunity" before a big jump in prices by the end of the year, he said.


"Importing an average of 8.5 million barrels per day between January and April, China has overtaken the U.S.as the world's largest crude oil importer", said Commerzbank in a daily note. Goldman Sachs Group Inc. and Citigroup Inc. said the market is tightening and that the selloff last week to the lowest in five months wasn't based on fundamentals.

On the demand side, China's crude oil imports in April eased by nearly 9% from March to 8.37 million bpd, although this was largely due to refinery maintenance.

US oil production has risen more than 10 per cent since mid-2016 to 9.3 million bpd, close to levels of top producers Russian Federation and Saudi Arabia.

"It's all about inventories and US shale versus OPEC", said Hussein Sayed of brokerage FXTM. OPEC members, including Saudi Arabia support the extension of Vienna deal.

Hussein Sayed of brokerage FXTM said oil prices would probably rally, "but the recovery won't be a straight line".

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