Oil rose more than 2% yesterday to US$52 a barrel after top exporter Saudi Arabia and Russian Federation said supply cuts needed to last into 2018, a step towards keeping an Organisation of the Petroleum Exporting Countries (Opec)-led deal to support prices in place longer than originally agreed.
"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.
Global benchmark Brent increased by as much as 3.3 per cent to US$52.52 a barrel on ICE Futures Europe and West Texas Intermediate climbed by up to 3.4 per cent, to $49.45 a barrel on the New York Mercantile Exchange.
The statement, made on the sidelines of an economic summit in China, is an admission that the efforts of the world's biggest exporters to balance the world oil market by holding back 1.8 million barrels a day of crude have failed to end the current glut as quickly as they hoped.
The EIA said it expects OPEC's total oil export revenues to increase in 2017 and 2018 because of gains in crude oil prices.
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.
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Shale producer Pioneer Natural Resources (PXD) said recently its break-even oil price is just $20 a barrel, and the company could make "good returns" at $40 dollar oil. And two, their determination to take the bull by the horns and set their oil price marker down early. Analysts believe that other countries will support the proposal as positive effects of the strategy are obvious. Libya's crude production has risen to more than 800,000 barrels a day as fields restart, the most since 2014.
United States cyber stocks jumped, but the largest advancing sector on Wall Street was energy as shares tracked oil prices higher.
In addition, US oil production is rising very quickly and is now up more than 10 per cent since mid-2016 to 9.3 million bpd.
Net oil export revenues of OPEC countries fell 15 percent past year, according to the Energy Information Administration (EIA).
Goldman retained its average Brent price forecast for the third quarter of 2017 at US$57 per barrel. "It looks quite gloomy for crude as demand for commodities isn't recovering as fast as the market expected, despite the fact we have entered the driving season in the second quarter".
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