TOKYO (Reuters) - Russian Energy Minister Alexander Novak said the oil market was improving with production cuts by OPEC and non-OPEC members, including Russia, trimming surplus supply that had squeezed prices for years, but declined to say whether the output reductions would be extended.
Novak, speaking to reporters on a visit to Tokyo on Friday, said prospects for an extension of the deal, set to expire at the end of June, into the second half of the year would be discussed next month.
The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries meet on May 25 to discuss extending curbs agreed last year that cut crude oil output by 1.8 million barrels daily, two-thirds of that from OPEC.
“It is up to the discussion of the (ministerial) meeting (in May),” he told reporters. “At the moment we are analyzing the condition of the market and trying to develop a prognosis.”
“As we see now the situation is gradually improving from the beginning of March,” said Novak. “The surplus amount of oil has been reduced. The situation is getting more and more stable and there’s less volatility on the market.”
Novak said that current oil prices are reflective of the oil market situation, with benchmark Brent prices now around $53 a barrel. The minister said last week Russia will cut its crude oil production by 300,000 barrels per day (bpd) by the end of April as agreed with other major producers.
Leading Gulf oil exporters Saudi Arabia and Kuwait gave a clear signal on Thursday that OPEC is giving serious consideration to extending the production cuts. Saudi Energy Minister Khalid al-Falih said consensus is growing among oil producers that the supply restraint pact should be prolonged.
OPEC sources said an internal assessment was that if they failed to extend the agreement, oil could slide back to $30-40 a barrel.
Reporting by Osamu Tsukimori; Editing by Christian Schmollinger and Kenneth Maxwell