Kazakhstan backs OPEC's decision to cut oil output

Despite OPEC and Russia's output cuts, oil stockpiles in the U.S. and other major economies remain stubbornly-high - and that's spooking impatient investors.

Oil prices have rallied in the last several weeks on expectations of an extension, but some had been hoping for deeper and longer cuts.

In May, however, production recovered to nearly 800,000 bpd.

Oil prices had earlier fallen by more than 50 per cent in less than two years, from levels of over $120 a barrel. "It will have more benefit in 9 months and we think it is a period that will have more stability in the market", Press TV quoted Iraqi Petroleum Minister Jabbar Ali Hussein Al-Luiebi as telling reporters following the OPEC meeting here.

Canada and Libya's production is also inching higher, which together with surging USA production has hindered Opec's efforts so far this year as global inventories continue to remain at elevated level.

Opec countries and 11 other oil-producing nations, including Russian Federation, first agreed to reduce production last December in an effort to boost flagging prices. A six-month extension would be "disappointing" while a nine-month pledge will offer some support to oil prices.

World stocks hit record highs on Thursday and the dollar dipped after the U.S. Federal Reserve signaled caution in raising interest rates, while oil fell after top producers extended output cuts for shorter than some in markets had expected. After all the rise of United States shale is one of the central reasons Opec, Russia and the other countries had a problem to start with.

The organization will face the test of defending market share and generating revenue growth as it transitions from the curbs, the bank said in a May 25 report.

Gold prices continued to hold steady near the highs of the range and as we had mentioned in our forecast yesterday, we are likely to see the prices consolidate and range in this region as we approach a lean phase as far as economic and fundamental drivers are concerned.

The price of Brent plunged $2.02 per barrel after the announcement to $51.94 while West Texas Intermediate shed $2.05 at $49.31.

"The U.S. shale producer does what everyone thought was impossible".

"You have a market that's in deficit and you have to pull from inventory", said Robert Mark, a portfolio manager with financial services firm Raymond James.

Oil stockpiles in developed countries in the OECD jumped by 24 million barrels during the first quarter to a new record of 1.2 billion, according to the International Energy Agency.

With U.S. output rising steadily and OPEC and its allies potentially ramping up production in 2018 to regain lost market share, many traders already expect another price slump. "OPEC leadership commended the execution of [the agreement] commitments both by OPEC and non-OPEC countries". WTI is now trading at $49.1 per barrel and Brent at $2.7 per barrel premium to WTI.

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