* Saudi, Russia, Iran, Iraq endorse pact to extend supply
cuts
* Saudi Arabia's Falih says deal likely to be extended by 9
months
* GRAPHIC-World crude oil output, demand https://tmsnrt.rs/2ZIjBbe
* U.S. oil production https://tmsnrt.rs/2Ino66i
(Adds settlement prices)
By Jessica Resnick-Ault
NEW YORK, July 1 (Reuters) - Oil prices pared gains on
Monday after worries about oversupply persisted, pulling back
from an early rally as OPEC extended supply cuts until March
2020 during a meeting in Vienna.
The Organization of the Petroleum Exporting Countries agreed
on Monday to extend oil supply cuts until March 2020, three OPEC
sources said, as the group's members overcame their differences
in order to prop up the price of crude amid a weakening global
economy and soaring U.S. production. OPEC is slated to meet with Russia and other producers, an
alliance known as OPEC+, on Tuesday to discuss supply cuts amid
surging U.S. output.
Brent crude futures LCOc1 for September delivery settled
up 32 cents a barrel at $65.06. During the session, they touched
an intraday high of $66.75. The August delivery contract closed
at $66.55 a barrel on Friday.
U.S. crude futures for August CLc1 climbed 62 cents to
settle at $59.09 a barrel, after earlier touching their highest
in over five weeks at $60.28.
“WTI and Brent today have fallen from intraday highs as
market watchers become uneasy by the long wait for the OPEC
meeting to conclude, a sign that there could be some form of
disagreement," said Tony Headrick, an energy market analyst at
St. Paul, Minnesota commodity brokerage CHS Hedging LLC.
The closed OPEC meeting lasted for more than six hours.
"It's going to be hard to hold onto the gains: there's going
to be a question in the market as to whether the cuts are
enough," said John Kilduff, a partner at Again Capital
Management in New York. "So far they're getting the benefit of
the doubt, but we've slipped a bit off the highs."
Iran - under U.S. sanctions alongside OPEC ally Venezuela -
on Monday joined top producers Saudi Arabia, Iraq and Russia in
supporting an extension of a supply cut. Russian President Vladimir Putin said on Sunday he had
agreed with Saudi Arabia to extend existing output cuts of 1.2
million barrels per day (bpd) by six to nine months.
Saudi Energy Minister Khalid al-Falih said the deal would
most likely be extended by nine months and no deeper reductions
were needed.
"If Russia, Saudi Arabia and the other key OPEC members keep
production at the levels they produced in H1-19 they will ensure
that the global oil market is not flowing over. They will only
have to pay a small restraint while reaping a nice oil price of
$60-70 a barrel," said SEB's Bjarne Schieldrop.
"OPEC as a whole is losing market share. But this burden is
not evenly distributed as it is Venezuela and Iran who are
taking almost all the pain."
Oil prices have come under renewed pressure in recent months
from rising U.S. supplies and a slowing global economy.
U.S. crude oil output in April rose to a fresh monthly
record of 12.16 million bpd, according to the U.S. Energy
Information Administration, even though shale production growth
likely peaked last year. Meanwhile, financial markets were buoyed by a thawing of
U.S.-China relations after leaders of the world's two largest
economies agreed on Saturday to restart trade talks.
However, Citi analysts were sceptical that both sides would
reach a deal soon.
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GRAPHIC: World crude oil production and demand by region https://tmsnrt.rs/2ZFAZ0e
GRAPHIC: U.S. oil production https://tmsnrt.rs/2Ino7XU
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