OPEC said to favor nine-month extension of output deal

The Organization of Petroleum Exporting Countries (OPEC) is said to favor extending its current production limit deal, which ends March next year, by another nine months, Reuters reported, citing four unnamed OPEC sources.

According to three of the OPEC sources, curbs would likely stay until the end of 2018, while a fourth said an extension of six to nine months would be required wipe off oversupply.

A final decision, however, could be delayed until early next year as stronger-than-expected demand growth allows the group the flexibility, the report said.

“If demand growth is performing very well, then the decision might be postponed till early next year,” one of the four OPEC sources said. “But there is still a big chance for it to be taken in November.”

OPEC members are scheduled to meet for their regular oil policy meeting on Nov. 30 in Vienna.

If a decision does not come in November, OPEC and other exporters could meet in early 2018, two OPEC sources said.

The level of production cuts is likely to remain unchanged, two OPEC sources said, since some producers would struggle to reduce output further, the report said.

In December last year, OPEC and other major non-member producers including Russia agreed to cut oil output by about 1.8 million barrels per day, to help rebalance global oil markets.

Meanwhile, speaking at the oil and money conference in London chief executive officer of Vitol Group, Ian Taylor, said he see Brent oil prices to fall more than 20 percent by 2018 as US output is expected to rise.

“We are all expecting a little bit of tightening to come through because we all see demand growing next year at a pretty good rate, we all expect OPEC to hold together and we expect probably the capital discipline to (remain in place),” Taylor was quoted as saying by Market Watch.

Taylor said there is a chance that oil price could be closer to $40 a barrel than $50, pointing to $45 per barrel as his 2018 forecast.