The cuts came as prices tumbled below $50 a barrel for the first time this year, and anxious executives discussed rising USA rig counts at an industry meeting in Houston.
West Texas Intermediate for April delivery, which expires today, fell 56 cents to settle at US$48.22 a barrel on the New York Mercantile Exchange. Though some of the OPEC members have indicated their willingness to prolong the cuts, comments by Saudi Arabia and Russian Federation, world's largest crude producers and effectively leaders of the OPEC and non-OPEC blocs in the production restraint deals, carry far more weight. While OPEC won't decide until May whether to prolong the curbs, energy ministers including Russia's Alexander Novak will meet this weekend in Kuwait to discuss the deal's progress. An OPEC panel is scheduled to meet this month to review compliance with the current deal.
Despite thin Asian trading that resulted from a Japanese holiday, the dollar edged down against its primary trading partners, with the dollar index starting the week at 100.140.DXY, a 0.16 percent decline. Longs fell 8.9 percent to the lowest level since early January, and shorts doubled from the prior week to the highest since November.
Lower crude oil prices have a negative impact on oil and gas producers' earnings such as Noble Energy (NBL), Chevron (CVX), Northern Oil & Gas (NOG), and Triangle Petroleum (TPLM).
Crude oil prices could remain steady this week if buyers react to the IEA projections and the sellers continue to react to the global supply overhang.
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Meanwhile, growing USA oil production and inventories weighed on sentiment, as investors braced for a fresh batch of US crude inventories data later this week while the number of active USA rigs rose for a ninth straight week. Many shale producers view $50 as a benchmark price for profitability.
"There is good, strong momentum to the downside", futures brokerage CMC Markets said in a note. Deutsche Bank AG predicted Thursday that the group will extend the cuts not only through the end of this year, but also through the end of 2018.
Oil rig pumpjacks operating in the Wilmington Field area, July 30, 2013 - Reuters pic NEW YORK, March 21 - Oil fell as a Libyan port is set to resume shipments and the U.S. drilling revival undermines the potential for Opec output curbs to rebalance the market.
"The shale boom is back", Norbert Ruecker, head of commodities research at Julius Baer, said.