When they meet in Kuwait Sunday, a handful of OPEC and other oil producers are expected to put a happy face on their production agreement, and they should point to the potential for extending the deal in May.
That should help support oil prices, after the recent 10 percent plunge since investors began to doubt the deal earlier this month. The international benchmark Brent crude temporarily fell below the psychological $50 level this week.
Representatives of the five monitoring countries this weekend are expected to review where producers stand on compliance with the six-month agreement to remove 1.8 million barrels a day from the market. As president of OPEC, Saudi Energy Minister Khalid Al-Falih is expected to attend, along with representatives from the five members of the monitoring committee — Kuwait, Algeria, Venezuela, and non-OPEC nations Russia and Oman.
"Without the production cut agreement, I think you could basically target the low-to-mid $30s. I'm of the mind they extend it," said Gene McGillian, manager market research at Tradition Energy. "The Saudis need the revenues from higher oil prices. They know that prices at $30 to $35 is trouble for them."