Russia has exceeded its assigned quota for crude oil production cuts by 790 barrels a day, sources from the Energy Ministry told media. Russia was supposed to cut 300,000 bpd from its October 2016 average daily output levels, and it reached that milestone shortly before the end of April.

Given the current market sentiment, which is still leaning towards pessimism overall, the news will hardly have a big effect on prices, especially with the market eagerly awaiting the latest weekly inventory report of the U.S. Energy Information Administration. Yesterday, the American Petroleum Institute estimated that inventories had dropped by 4.2 million barrels in the week to April 28.

Meanwhile, most OPEC nations that are taking part in the production cut agreement struck last November are continuing to reduce their daily production, with the group’s total falling to 31.97 million bpd, according to a Reuters survey. News from Libya, which is exempted from the cut, put further pressure on prices, when the National Oil Corporation said it had upped output to over 760,000 bpd – the highest since December 2014.

Analysts and industry insiders such as Continental Resources’ Harold Hamm believe that the cut extension is almost certain. The certainty comes from rising U.S. production, which is offsetting OPEC’s cuts, and from the fact that those that are cutting the most are also losing market share, which is hardly a good long-term strategy for price improvement.

If OPEC does not extend its cut deal, one analyst told Platts, prices could revert to US$40 per barrel. On the other hand, FGE chairman Fereidun Fesharaki said that a price level of between US$50 and US$60 is sustainable with further cuts, perhaps even into 2018.

Russia has given its principal support of an extension, but so far Alexander Novak has not gone into any details besides saying that the support is conditional on consensus within OPEC.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com: