From the San Antonio Express News

U.S. shale oil producers are likely to be the biggest benefactors from a pledge on Monday by Saudi Arabia and Russia to extend oil production cuts through 2018.

“I sort of wondered if they (Saudi Arabia and Russia) might conclude that it really wouldn’t do any good and I’m not sure that it will,” Thomas Tunstall, an economic development research director at the University of Texas at San Antonio, said. “But hey, it’ll certainly make the shale producers in the U.S. happy.”

The Organization of the Petroleum Exporting Countries and Russia backed a 1.8 million barrel-a-day oil production cut by oil producing countries in late-2016 that went into effect in January. The cuts — set to expire in June — helped bolster prices to around $50 a barrel from a 13-year low of $26 a barrel in February 2016. Russia and Saudi Arabia, OPEC’s largest member, are pushing for the rest of the group to extend those cuts through March 2018 when they next meet May 25 in Vienna.

The Monday announcement pushed U.S. oil futures up 2.1 percent to $48.82 in afternoon trading. Brent crude, the international benchmark, rose 1.9 percent to $51.79.

Both OPEC, is a cartel of 12 countries led by Saudi Arabia that produce a third of the world’s oil, and U.S. producers have suffered during the bust in oil prices. But U.S. shale drillers, which can turn a profit with oil below $40 a barrel, quickly ramped up production as prices recovered last year, dampening the impact of the OPEC cuts.

The U.S. oil industry produced an average of 9 million barrels a day in February, compared with a recent low of 8.6 million barrels a day in September, according to the U.S. Energy Information Administration.

 


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