Putin sees promising outlook for extension of oil production cut deal

The Aussie rose for a fourth day after briefly paring gains following weaker-than-expected economic data from China, its largest trading partner.

"If they are serious about taking barrels out of production, doubling the cut they applied at the beginning of the year is the bare minimum they have to do", said Aslam.

Immediately after the briefing, oil prices began an upward swing to a three week high, gaining almost $2 on the barrel.

The ICE U.S. Dollar Index DXY, -0.33% a measure of the buck against six rival currencies, fell 0.4% to 98.85.

OPEC began production cuts on January 1 in a bid to reduce swollen global inventories and bolster the price of oil, which is still stuck at half its 2014 level.

Brent crude futures, the worldwide benchmark for oil prices, were at $50.86 per barrel at 0125 GMT (9:25 p.m. ET on Sunday), little changed from their last close at $50.84.

"With any extension likely to keep prices elevated, it will be interesting to see whether the U.S. can continue to ramp up production on the same scale as it has in recent months". But American crude inventories are finally showing some signs of shrinking, falling for the past five weeks from record levels at the end of March.

Meanwhile, Brent crude oil, the worldwide benchmark, is higher by 2.9% at $52.33 per barrel, and WTI crude oil is up by 3% at $49.27 per barrel. They recommended that the next round of reductions should be on the same terms as the first deal, when producer nations agreed to cut nearly 1.8m barrels a day for the first six months of 2017. For the strategy to work, however, we believe that (1) compliance needs to remain high and (2) long-term oil prices need to remain low to prevent shale producers from ramping up investment significantly more.

But there's one thing standing in the way of higher prices: US oil production.

They were joined by 11 producers outside the organization, including Russian Federation, in an effort to ease the oversupply of crude oil which has put severe financial strain on producing nations over the last three years.

"I think OPEC and Russian Federation recognise that in order to get the market back on their side they will need "shock and awe" tactics where they need to go above and beyond a simple extension of the deal", said Virendra Chauhan, Singapore-based analyst at Energy Aspects. Some analysts said that USA production could still threaten to disrupt the market balance unless the cuts were deepened.

The ministers will consult with other oil-producing countries with "the goal of reaching full consensus on the 9-month extension" they are seeking, according to the statement. "It would be nice to see it get inside a five year range at the very least", he said.

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