Oil prices narrowly higher as producers meet on output pact

London - 22 September 2017: Oil prices were narrowly higher on Friday as the market waited to see whether major oil producers would back an extension to output cuts beyond March at a meeting in Vienna.

Brent crude futures were at $56.51 a barrel at 0725 GMT, up 6 cents, or 0.11 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 10 cents, or 0.2 percent, at $50.65 per barrel.

Some ministers from the Organization of the Petroleum Exporting Countries and from other producers are set to meet in Vienna at 0900 GMT on Friday to discuss a possible extension of an oil supply cut deal that is aimed at supporting oil prices.

An OPEC source told Reuters the meeting had been postponed from 0800 GMT.

The ministers from OPEC nations and others led by Russia will discuss a possible extension to an agreement under which producers are cutting output by 1.8 million barrels per day (bpd). They are also expected to discuss the idea of monitoring exports to assess compliance.

Goldman Sachs said that talks over extending cuts are “noteworthy but premature”, adding “we believe it is unlikely that the committee will recommend extension of cuts this week.”

Michael McCarthy, chief market strategist at CMC Markets in Sydney, predicted there will be “strong rhetoric but whether or not they will be able to boost oil prices from current high levels is another question”.

There will be some focus on whether Nigeria and Libya, who have been exempt from the output cuts, will join any future efforts. The two OPEC members have both been invited to Friday’s meeting.

“The market is still split as to whether the meeting will bring fresh supply cuts to the table,” ANZ bank said in a note.

“With U.S. stockpiles remaining elevated, a firm signal about lower supply is likely needed for price momentum to remain positive.”

Despite the output restraint of OPEC and some non-OPEC producers, and their agreement to extend their cuts to March 2018, increasing U.S. oil production has curbed crude price gains.

Hurricanes in the Gulf of Mexico have also pushed up crude inventories as some U.S. refineries have been shut by flooding.

The Energy Information Administration (EIA) on Wednesday reported that U.S. crude production rose to 9.51 million bpd in the week ended Sept.15 from 8.78 million bpd a week earlier.