Oil slumps amid reports that deeper cuts may not happen

Crude oil prices fell below the $54-mark on Thursday, amid reports that Saudi Arabian energy minister Khalid Al-Falih has denied the need for a tighter ceiling for the output limit agreement between OPEC and non-OPEC countries.

Brent crude tumbled from a high of $54.63 per barrel and was last trading down 0.6 percent at $53.63/bbl. WTI crude was down 0.8 percent at $50.95/bbl.

The Organization of Petroleum Exporting Countries (OPEC) and other major producers, including Russia, are in Vienna to discuss the output limit agreement and its possible extension.

The OPEC and 11 non-OPEC countries had last December agreed to slash production by a combined 1.8 million barrels per day (bpd), as part of the attempt to shore up prices and rebalance global oil markets.

The output deal was initially agreed on for six months, ending June.

A number of countries, including market leaders Saudi Arabia and Russia, have already voiced support to extend production cap for another nine months.

The Joint Ministerial Monitoring Committee (JMMC), formed to oversee compliance to the deal, also recommended a nine-month extension.

However, analysts believe a positive pressure to prices will be based on the duration of the extension and possibly a tighter output ceiling.

An extension of the existing production cut deal appears to be largely priced into the market, Edward Bell, commodity analyst at Emirates NBD, said in a recent note.

“The duration (of the deal is) the main variable for debate,” Bell added.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com