OPEC Agrees To Extend Oil Supply Cuts Until End Of 2018: Bloomberg

With OPEC delegates sequestered in a Vienna conference room, as they negotiate the proposed 6-9 month production cut extension, at least one appears to be leaking the decision process to media outlets, because moments ago Bloomberg reported that OPEC ministers have agreed to extend their production cuts until the end of 2018 – agreeing with the Saudi-proposed 9 month extension – and discussions have now moved on to the mechanism that will be used to review the agreement in the middle of the year.

OPEC AGREES TO EXTEND OIL SUPPLY CUTS TO END OF 2018: DELEGATE

OPEC TALKS MOVED ON TO DETAILS OF MID-YEAR REVIEW: DELEGATE

These were some of the earlier headlines heading into the “announcement”:

IRAQ SAYS RUSSIA JOINING IN EXTENDING OUTPUT CUTS TO END OF ’18

SAUDI MIN: WE WILL REVIEW OUR EFFORTS IN JUNE NEXT YEAR

SAUDI MIN: OPEC+ MUST DO MORE BECAUSE OVERHANG REMAINS

AL-FALIH: IN 2Q AND 3Q, WE’LL SEE HEALTHY INVENTORY DRAWDOWNS

IRAQ COMMITTED TO LEVEL OF OPEC CUTS

U.A.E.: OPEC LOOKING FOR WIDER GROUP OF COUNTRIES TO JOIN CUTS

IRAN SAYS NO DISCUSSION TO RAISE CUTS VOLUME BEYOND 1.8M B/D

While oil prices had traded near session highs ahead of the leaked announcement, they have failed to spike on the news and in fact Brent is back under $64, suggesting that, as Goldman predicted, a favorable outcome had been more than priced in, and now the details of the agreement will determine which way oil moves next.

As Citi wrote moments before the report, “it looks like a 6-9 month extension is the most common expectation amongst OPEC members, though the inclusion of caveats is looking increasingly likely. Comments from Saudi’s Al-Falih suggesting that they expect to see healthy inventory drawdowns in 2Q’18 and 3Q’18 hint that the Kingdom may not be keen to commit to a firm extension beyond that, instead perhaps looking to keep their optionality open.”

Bloomberg also reported the Russian Energy Minister saying that specific details of the cuts will be discussed today along with “issue of gradual recovery” (details of which could swing the market today). There is also chatter around Nigeria’s current production levels – Nigeria (along with Libya) is currently exempt from the cuts, but it would be an interesting development if these countries joined the deal (though no further comments on this aspect as yet).