Oil prices fall as White House proposes U.S. oil reserve sales

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Some analysts argue that deeper cuts are required to balance the market, but note the cuts so far have stimulated USA energy companies to boost shale production.

OPEC countries together with Russian Federation will meet in Vienna on 25 May to discuss extending their production cut agreement, which we believe should support the oil price recovery ahead.

On Thursday, official data showed OPEC leader Saudi Arabia's crude exports rose 275,000 BPD in March from February and its stockpiles increased.

Falih was paying a rare visit to Iraq in the latest effort by the top oil producer to convince its fellow OPEC member to extend supply cuts to ease a global glut.

"We will do whatever is necessary", he said, expressing an openness to "creative" solutions. Early this month, Iraq, which committed to reduce daily production by 210,000 barrels to 4.351 million barrels, said it supported a six-month extension, but didn't comment on the nine-month proposal.

Then in December, non-OPEC producers led by Russian Federation agreed to reduce their own output by 558,000bpd.

Falih said his understanding from a public announcement by his Iranian counterpart was that Iran was happy to stay within the production ceiling allocated to them a year ago. "We did go the extra mile initially to set an example and be a role model, and I think our colleagues appreciated that and responded positively".

Traders said the victory of Emmanuel Macron in the French presidential election against far-right Marine Le Pen also supported oil prices as it raised hopes of a more stable European economy. According to Goldman Sachs the number of rigs have increased by 128% in the United States since mid-last year leading to an increase in USA oil production of close to 900,000 barrels per day or about 10%.

OPEC's and Russia's pledge to tighten the market are also being undermined by oil drillers in the United States.

"The binding force to sustainably slow shale growth lies on the funding side", Damien Courvalin, a Goldman analyst, wrote in the research note to clients.

"Oil is unlikely to advance too far".

Among the scenarios being considered by the panel are a six or nine-month extension with a possible deeper cut, reports said.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so.

The analyst stressed that an output cap of more than two million barrels a day might be on the cards with Saudi Arabia as the U.S. shale drillers are skewing the rebalancing. "So maintaining the current discipline of production cuts is key and we expect the current quotas to hold for the most part".

Oil prices fell 1 percent on Tuesday after U.S. President Donald Trump proposed to sell half of the United States' Strategic Petroleum Reserve (SPR) in the next 10 years as well as to speed up Alaskan exploration.