Oil plunges 5 pct on disappointment with OPEC cuts

Oil languishes after OPEC fails to deepen supply cuts Asia stocks retreat

Oil languishes after OPEC fails to deepen supply cuts Asia stocks retreat Crude prices remained subdued

"We believe average annual prices for the year are likely to remain around $50-$55 per barrel for Brent, given impressive U.S. shale production growth, and potentially worse compliance with the output cuts than in the first half of 2017", said the analysis.

"As expected following comments ahead of the meeting on behalf of Saudi Arabia and Russia, OPEC members have agreed to prolong the existing production curtailment (a cut of 1.8m bbl/d including Russia's cuts) to the first quarter of 2018".

"The conformity level for member countries is exceptionally high".

The oil market on Friday struggled to recover from a 5% plunge in prices following weaker than expected action from the OPEC group of countries.

Clawing back some of Thursday's losses, global benchmark Brent futures LCOc1 were up 28 cents at $51.74 a barrel at 0837 GMT.

Major oil producers led by OPEC have greed to extend their crude output cuts through March of next year, but that could feed a glut of global supplies once the deal is done. Investors are also nervous about increasing crude output from Nigeria and Libya, which are exempt from cutting production as they attempt to restore supplies sidelined by internal conflicts.

"This is half of the roughly 1,800 million barrels per day taken off the market by the OPEC-led cuts", said the analysis.

Yergin noted that the USA shale production is profitable at $40 to $50 per barrel today.

Oil prices dropped more than 4 percent as the market had been hoping oil producers could reach a last-minute deal to deepen the cuts or extend them further, until mid-2018. Opec originally increased production to lower the oil price, making fracking less cost-effective, so forcing shale oil producers out of business.

The American Automobile Association projected 34.6 million people will drive 50 miles (80 km) or more from home during the end-of-month holiday period, the most since 37.3 million in 2005 and a 2.4 increase from previous year.

Many crude traders closed out short positions and bid up prices in advance of the meeting in case ministers surprised with a deeper cut ("Hedge funds shuffle positions as OPEC decision nears", Reuters, May 23).

In early December, oil producers outside OPEC, led by Russian Federation, agreed to reduce output by 558,000 barrels per day (bpd). This is why Saudi cargoes to the U.S.in recent months have totaled 1.21 million barrels a day - the highest rates since 2014, the year of the oil price crash.

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