The oil price is rising Thursday, as reports suggest the OPEC output cap extension has been agreed. No formal announcement has been made by OPEC.
By 1440 BST, the price of Brent Crude oil was up 0.94% at $63.12. US WTI crude was selling for $57.66, a 0.63% increase.
The multi-day meeting between OPEC and Non-OPEC oil producers in Vienna, is set to end Thursday.
While it still hasn’t been confirmed, a Bloomberg report, citing an OPEC meeting delegate, states the extension of the current oil output cap, to the end of 2018, has been agreed. The same report said the meeting was moving on to the mid-year review that is thought to be part of the extension.
The price of oil has been falling for the past few days on concerns of oversupply and worries the extension might not happen. However, it appears that enough sources and reports are saying the same things. And that’s supporting the oil price.
The OPEC output cap was initially put in place to help put a floor under slumping oil prices. In 2008 the oil price went as low as $40 per barrel. The output cap has been in place for one year and compliance to the cap has been high.
The original cap was due to end in March 2018, but this OPEC meeting was all about gaining an agreement to extend the cap until the end of 2018.
This was likely fuelled, in part, by the ambition of oil producing countries to secure a steady, balanced price of oil of around $60 per barrel.
The mid-year review, that’s reportedly under discussion, is to ensure the price of oil doesn’t rise too high. If there are signs the oil price is overheating in the 2018, then the mid-year review will likely allow producers an opportunity to end their compliance to the output cap.
The official details from the meeting could be announced any time Thursday, by OPEC.