Russia, Saudi call for oil output deal extension

North Korean leader Kim Jong Un waves to the Korean People's Army construction department officials in Pyongyang

European benchmark North Sea Brent crude rose $1.54 to $52.38 a barrel by 1005 GMT (6.05 a.m. ET) and traded intraday at $52.52, the highest since April 24. The deal could cut production by 1.2 MMbpd from OPEC and 0.6 MMbpd from non-OPEC producers.

"Russia is the world's biggest oil producer", adds the paper, while Saudi Arabia, the de facto leader of the Opec cartel, "is the biggest exporter". The current agreement, established last November, is set to expire at the end of June.

Opec ministers will meet at the end of this month in Vienna, where they will discuss an extension of the deal into the first quarter of 2018.

The supply cut has helped prices recover from a low of $26 a barrel early a year ago. When prices collapsed, United States production eventually dropped. A new Rystad Energy report said that even if prices fall to US$40, shale producers will continue growing production.

Oil was trading at $49 per barrel early Monday.

Its US counterpart West Texas Intermediate (WTI) followed a similar trajectory and was this morning above $48 a barrel.

OPEC and a group of 11 oil-producing nations agreed to reduce their output by a combined 1.8 million barrels a day in the first six months of this year.

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American oil-drilling activity has risen for 17 straight weeks, according to Baker Hughes' rig-count data, and the US government last week boosted its domestic-production estimates for this year and next.

However, yesterday's weekly report from the USA energy regulator the Energy Information Administration showed a drop in inventories of more than five million barrels. However, its infrastructure and property activity grew more than expected. This leaves us reiterating our 3Q17 $57/bbl Brent price forecast and, with an increasingly likely extension of the cuts, raises our confidence that the oil market will shift into backwardation in 3Q17.

Taking the big bazooka of the wall, they jointly announced that the OPEC-led production deal would be extended by nine months until March 2018.

"We are sceptical about Russia's willingness to actively participate in any extended cuts".

The announcement by the Russian and Saudi ministers came ahead of the next official meeting of the Organization of the Petroleum Exporting Countries (OPEC) on May 25.

On Monday, with crude prices increasing by over 2% the market was more positive. As recently as June 2014, the price of a barrel was nearly $109.

The small increases come after bourses in the USA closed lower on Friday, after retail sales and inflation missed forecasts and gave a mixed outlook of the US economy.

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