Dubai:

The tone of the statement from the joint committee of Opec and non-Opec may not enthuse oil traders, who have been cutting record bullish positions in the commodity.

Brent crude prices are trading at the critical $50 per barrel mark, after falling by 12 per cent in the last few weeks, and analysts say prices may fall more.

“We might see oil prices under pressure on Monday on some disappointment on a lack of a recommendation,” said Giovanni Staunovo, commodities analyst at UBS said in an email.

Ole Hansen, head of commodity strategy at Saxo Bank agreed, saying “considering that anything but an extension could have very negative price consequences.”

Saxo Bank expects Brent crude to establish a new lower range between $50-54. “A break below however could see it challenge $46,” Hansen said.

The compliance on output cut has improved so far, the The Joint Opec/Non-Opec Ministerial Monitoring Committee (JMMC) said.

“The committee expressed its satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 per cent conformity,” the committee said in a statement.

Until February, the compliance level stood at 94 per cent, an 8 per cent increase on month, which according to the committee demonstrated the willingness of all participating countries to continue their cooperation.

“In order for an extension to have any impact 100 per cent compliance will be required during the first six months by all members of the group including Iraq and Russia,” Hansen said.

“Failure to achieve that over the coming months could pose a big challenge given recent comments from Saudi Arabia about it being against free riding,” Hansen added.

“We reiterate that the Opec and non-Opec production cuts are tightening the oil market and will drag down oil inventories over the coming months,” Staunovo said.

“Also, Opec’s meeting on May 25 is a key date to watch. We expect the production curb deal to be extended with slightly higher supply volumes,” Staunovo added.

In December, the Opec and non-Opec producers agreed to cut oil output by 1.8 millions of barrels of oil per day to cut swelling inventories. Prices had gained more than 50 per cent last year on the back of the agreement.