London- Oil prices ended modestly higher on Thursday after sources said the Organization of the Petroleum Exporting Countries (OPEC) may consider extending its oil supply-reduction pact with non-members and might even apply deeper cuts if global crude inventories failed to drop to a targeted level.
The group, together with Russia and other non-OPEC oil producers, agreed late last year to cut output by 1.8 million barrels per day (bpd) to reduce a price-sapping glut. The deal took effect on Jan. 1 and lasts six months.
OPEC’s supply pact could be extended by May if all major producers showed “effective cooperation”, an OPEC source told Reuters.
“There’s a good chance and high odds that the group (OPEC) decides that they want to continue this process,” Energy Aspects analyst Richard Mallinson said.
U.S. oil inventories have risen sharply in the past six weeks, with crude and U.S. gasoline inventories hitting all-time records last week, the U.S. Energy Department said on Wednesday.
Russia said on Thursday it will fully comply with the oil output cut agreement with other oil producing countries by the end of April.
Under the deal with OPEC and non-OPEC countries, Russia pledged to reduce its crude output by 300,000 barrels per day as part of a concerted effort to combat a global oil glut.
“We can get to 300,000 barrels per day at great speed by the end of April,” Energy Minister Alexander Novak told the Interfax news agency.
“This will allow us in May to produce exactly 300,000 less per day than in October.”
Novak said Russian production was currently down by more than 100,000 barrels per day and should be 150,000 barrels per day lower in March.
Technical issues affecting Russia’s production were stopping the country from going to the agreed level immediately, he added.