Malaysia Agrees to Extend Oil Output Cut

After the news that supply would be cut, the price of oil rallied above $60 dollars a barrel, where it has remained, with Brent Crude trading at around $61 on Wednesday, while WTI Crude sits a touch over $52.

Saudi Arabia's Energy Minister Khalid al-Falih said in a tweet he had discussed the state of the oil market with U.S. Energy Secretary Rick Perry on Monday in Dhahran, Saudi Arabia.

At the last OPEC meeting in Vienna, the agreement was again extended until the end of 2018.

The worst kept secret about the crude production cutbacks engineered by the Organization of the Petroleum Exporting Countries (OPEC) - that the US will continue to gain market share by pumping all out - was supported indirectly on Tuesday by the Energy Information Administration, which noted that the Americans are expected to end 2018 as the world's top producer.

Oil fell almost 3 percent on Monday, echoing the weakness in global stock markets as the focus returned to concerns about growth in demand and crude prices erased some of the gains made last week on an OPEC-led decision to cut output.

A steep increase in the pace of crude supply growth this year, especially in the world's three largest producers - the United States, Saudi Arabia and Russian Federation - has made a number of analysts wary about the prospect of demand being sufficient to mop up extra oil. The industry-funded American Petroleum Institute was said to report US crude supplies fell 10.2 million barrels last week, according to people familiar with the data.

OPEC will cut 800,000 barrels per day for six months starting January.

On the other hand, Al Mazroui stressed that talks between America and China are important for the oil market. Crude oil price action was further supported on news that Libya's largest oil field was halted after members of the Petroleum Facilities Guard shut down pumps leading to tanks. Saudi Arabia is now the world's largest oil exporter. Low-sulfur crude oil is often processed into gasoline and is in high demand, particularly in industrialized countries.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

OPEC heavyweight Saudi Arabia, the world's biggest crude oil exporter, will carry most of the burden by lowering its output by 500,000 bpd.