Comply to fully to fully comply. We need to comply with this decision for any period of time. Petrofac on a slippery slope. Shares hit an eightyear low after the coo is suspended amid allegations of fraud. And eu leaders roll out the red carpet for President Trump in brussels amid new tensions between the u. S. And uk over Intelligence Leaks. Good morning. It is thursday. Its a very busy one indeed because we have the opec meeting and weve got trump continuing his trip. Brussels today meetin with eu leaders. The ftse 100 off by 4 points. Xetra dax off by 0. 4 . The cac 40 also slightly trending lower. By in large not seeing major volumes across the markets today. Given that it is in many parts of europe ascension day. Switzerland and austria are closed. A major holiday in germany as well. But market theres are still open. So not a lot of activity. We are seeing activity in the oil markets today. Brent crude and wti are trending higher to the tune of 1 . 54. 50 is the price of brent. Traders pricing in that ninemonth extension. Opec ministers are meeting in vienna today and are widely expected to extend Production Cuts that were agreed on last year. Steve entered the building and is due to go live from the media scrum with the ministers in the next 15 minutes. Thats usually quite entertaining and usually informative. Lets get back to the other top story. President trump is meeting with eu leaders this morning in the latest leg of his trip. The atmosphere among the delegation is expected to be somewhat tense given the derogatory remarks President Trump has made about the European Union and brussels in the past. Lets get out to hadley who has bv covering the strip. The latest leaks are not helping the sentiment. We understand that President Trump will meet with theresa may later this morning and obviously those Intelligence Leaks which have dismayed the european and British Defense and security teams will come up. The bigger questions are whether or not this has implications Going Forward for nato intelligence sharing. Over the last year or so weve had several conversations with eu and british ministers about what brexit could mean for intelligence sharing as well and keeping people safe. Thats expected to come up. We understand that President Trump in the past has called nato obsolete, and even brussels a hell hole, hes rolled back those comments but the wonder is what mood that will set for this meeting. I want to bring in gina sanchez. Thank you for sticking around. You will be here for the next hour. We have a lot to talk about oil prices aside, well focus in on that in the next 45 minutes. First i want to talk about trump. He was hoping to turn a page on his first overseas trip. He was seemingly able to do that in israel, but maybe things are turning more sour with the Intelligence Leaks. Is whats happening in washington catching up with him here . I think it doesnt help. Right now he travels with a cloud over his head. It was already going to be a difficult first trip because he has his past to contend with, which is to say he has been inflammatory in the past with regard to europe and to brussels to expect a wide open door is not necessarily a realistic expectations. So he was already coming into the situation with a past. And i think kind of whats happening now in washington just makes it even harder for him to sort of start turning over a new leaf and create new relationships. It seems from a market perspective this week markets have been looking past that. Theyve been focusing on fundamentals. Earnings growth and Economic Growth. Do we care about all the back and forth . We do care about it because the optimism priced into the markets had to do with the idea that a Trump Administration could get a could push an agenda. If, in fact, the Trump Administration is going to be mired by controversy after vo controversy, their chances of pushing this agenda will be limited, which means the upside becomes far more limited. Now youre faced with dealing just with earnings. Earnings have been good, but a lot of that story is oil based. Well continue to discuss that in the remainder in the show. Coming up, hold your breath and enter the fray. Steve sedgwick gets set for the med media scrum. Well be back in two. Finding time to get things done isnt easy. But weve got the Digital Tools to help. Now with xfinitys my account, you can figure things out easily, so you wont even have to call us. Change your wifi password to something you can actually remember, instantly. Add that premium channel, and watch the show everyones talking about, tonight. And the bill you need to pay . Do it in seconds. Because we should fit into your life, not the other way around. Go to xfinity. Com myaccount welcome back. Treasury yields ticked lower and the vix ticked back below ten after meetings from the latest fed meeting showed policymakers are on the same page about winding the 4 4. 5 billion balane sheet, a process which has been a key concern for the market. Odds of a june rate hike remained unchanged at about 78 . Reporter minutes of the federal reserves may meeting affirmed expectations for a june rate hike with most of the meeting saying a rate hike would soon be proappropriate if the economy rebounded as expected. Some wanted evidence that the economy was on the mend from a weak First Quarter before hiking again. The economy grew less than 1 in the First Quarter but it is expected to bounce back to 3 this quarter and theres worry about havent soft inflation worries and deep uncertainty about the timing of fiscal stimulus from the white house and congress. The minutes show a number of participants took a swipe at the things going on in washington saying clarification would remove one source of uncertainty, in other words, telling washington to get on with the fiscal policy stuff. Most said the fiscal policy under consideration presented upside risks to the forecast. Others worried about a labor market too tight and could impose an inflation risk, so some hawks thought the fed was too slow in raising rates. All agreed to reduce the Balance Sheet this year and would do so according to a plan presented to staff but not yet approving, untiling they g inin inin ining a normal level. They have yet to say what that normal level is. Want to bring you pictures out of brussels. President trump is meeting with European Council president donald tusk and Jeanclaude Juncker this morning. He will also have a dinner with the newly minted french president , emanuel macron and meeting on the sidelines of his eu meeting, with the uk prime minister, theresa may. She has been saying or her government has been saying that they will raise concerns over the Intelligence Leaks after the manchester terrorist attacks. Donald trump was hoping that he was going to side step some of the awkward interactions there. But that may not be the case. Lets get back to gina sanchez. Lets talk about the story we touched on before the fed minutes yesterday. Simply what they told us is that the fed is somewhat concerns about the patch of weaker data i guess primarily weaker than expected cpi numbers. Is a june hike not a done deal after all . Interestingly, i do think they showed less conviction to that rate hike. Obviously they reaffirmed it. The markets are expecting it. I think if we didnt see a june rate hike it would be a surprise. I found it interesting that they did leave the door open for the possibility that the next three weeks of data will carry more importance than we expected. Particularly the jobs numbers next week. That means that the jobs numbers are so important once again as they were in the last couple years before we saw that stability in those numbers. Does that mean a lot of jittery trading when it comes to trading and the dollar . Well, the dollar has been trading off. To some degree the reflation trade has been making its way back out of the market. We had such a strong reflation trade at the beginning of the year, now things are looking as though well maybe its not going to be as positive as possible. I think that has to do with whats happening in washington. I think the weak patch of data feeds into that. So i do think that markets could get jittery. These are low volume times for the markets as we go in the doldrums of summer. So small moves could be bigger and amplified now. I guess it also depends on what your expectation is, your assumptions are on u. S. Economic growth. The Trump Administration is extremely bullish. Theyre expecting a 3 number at this point. Thats if tax reform is passed. If the infrastructure plan is going ahead. There are many question marks about that. Thats patently impossible. In the face of the demographic tends, never mind the productivity trends, but tit would be nearly impossible to hit a 3 growth rate. If you look at birth rates in the united states, were not even clearing replacement rates anymore. We are looking at a demographic shift that will be highly negative for trend growth. So the ability to get to 3 would take an extraordinary amount of fiscal stimulus. It will be hugely debt building for this economy. To be honest, i think the market, at least the treasury market is on your side if we look at tenyear treasury yields, theyre not signalling a 3 growth. Theyre signaling 1. 5 to 2 . Since we had the crisis, economists started at the beginning being positive. Then walking that back to somewhere below trend. I do think were at the beginning of finally seeing expansion in the united states. But its not as strong as we priced in. Theres no way we can support the idea of a 3 growth rate. What happens to the most popular trade now, which is go long europe. Maybe more underweight or neutral u. S. Does that have further to run . We thought we would be closing the trade by now. Our idea was we opened that trade in december, and we intended to keep it through the french elections. We figured buy the rumor, sell the fact. But interestingly i do think it has longer more to go. If you look, merkel has a better chance of being elected chancellor in september than she did before. Things are looking up in europe. But more importantly the Trump Administration is having a really hard time getting over the scandals. Crisis after crisis after crisis does not make for effective government in that light it puts downward the expectations on the united states. Which means the pe might have to rerate. What does that mean for the dollar . I had an fx guest on the show who said the dollar index has been oversold. Euro dollar has been overbought. At what point will that unwind even if we dont get the 3 Economic Growth in the u. S. . Were already seeing softening of that. I think the dollar continues to weaken. Yeah. Lets talk about some of the other asset classes. Lets talk about commodities. Lets leave that for the next 45 minutes when we do talk about opec. Want to talk about some other areas in the world, asia, for example, eamericamerging market. Thats another popular trade. Now with some of the brazil problems popping up again, do you think investors will think wait a minute, maybe thats not so attractive after all . The brazil trade was resilient given the scandal, what happened. Our view right now, we have actually been yun weigunderweig emerging market debt that has to do with rising interest rates. Given where we are now, we might moderate that a bit. Emerging market equity has been rallying off the back of stronger oil growth. Thats connected to the oil view. We think oil is stuck in a trading range. Finally, lets talk about oil. Oil prices do continue to climb higher as investors expect opec and nonopec members to agree on a Production Cut extension in todays meeting. Lets look at wti, up at 51. 92. Brent crude, 54. 57. You could waits o steve spoke to the Iranian Oil Minister and asked him his thoughts on an extension on the cuts. We think based on the consultation that we h and the reports that we received, its unanimous idea to continue the cut that we had in december that we decided. And for how long there may be some discussion with how long iran is ready for this discussion for any period of time. Nine months is the preferred period of time or six months . Both is acceptable for us. If iran were asked to make cuts, would that be acceptable given people have said there is slow rebalancing and maybe more would be needed from the organization and nonopec in order to get a swifter rebalancing . Its very important for all opec and nonopec participants in this argument to comply, to fully comply. Its very important and now we had very good compliance, but we need to comply with this decision for any period of time. Steve also spoke to the Iraqi Oil Minister about his countrys position and the negotiations. Sir, is iraq happy to go along with the ninemonth extension . Very happy. Is iraq going to comply . There are questions about iraqi compliance. Definitely. Do you think there needs to be more cuts to balance the market . I dont think so. We are talking about the freeze now. The freeze of the cut. We will continue with the cuts. But no more cuts are needed . We will discuss this. Lets get our oil expert on board, harry tillingarian has joined us around the desk. Why do you think theres such high con ten ssensus around, is a lot of lobbying on the part of the saudis . Theres been a lot of diplomacies, the saudis came forward with a proposition to extend cuts bay period of nine months. But reality has hit in the sense that opec assigned itself an inventory target as objective of its ply csupply cuts. They had no other choice but to extend the cuts. Nine months in itself, is that enough or are we also going to have to see deeper cuts to make a difference when it comes to price . I think in terms of price, whats really important is again, looking at inventories, the direction of travel. Its not so many whether we get to the fiveyear average or not by the end of the year, the market wants to see tangible, visibility reductions in Oil Inventories and exports as a result of Production Cuts. If opec maintains its compliance through the course of the summer, they will benefit and leverage a seasonal swing in demand, and we will have potential for inventories to decline and prices pushing towards the 60s rather than the low 50s. Youre saying the market will not go higher just based on an empty or not empty opec promise. It wants to see the hard data and hard facts. Gina, do you agree with that . I think one of the challenges to the opec story is whats happening in the united states. We have seen rig counts steadily increasing pretty much since they bottomed out. And the rigs that are coming online are two to three times more productive than current than current rigs, if you look at the iea report, which tells you thats a lot of supply continuing to come online, despite the opec cuts. I think that may be a bigger challenge. That combined with the fact that its driving season, were seeing weak demand data. It seems like u. S. Producers are defying all odds. At the low in 2016, they produced less than 1 Million Barrels per day. Now its back up to 9. 6. Do you think it will hit the 10 threshold very soon . I dont know about very soon, but its heading that way. Of course u. S. Shale supply, looking at a u. S. Shale supply that is shale 2. 0. Its not the same industry between 2010 and 2014. U. S. Shale oil supply, its a fact of life that opec will have to live with that along with other producers. It may take longer as you count the barrels of what is subtracted and added, but ultimately inventories will trend lower, even though shale oil is expanding. Of course youre right in saying that productivitywise were looking at the potential for further upward revisions in terms of the estimates we have. Today the u. S. Department of energy, through its eia agency, will release new forecasts. Well see if they up the forecast on shale again. Why is it that the u. S. Producer is so much more nimble . Why is he or she able to bring down costs so significantly when the rest of the world finds it tougher to work with the Current Oil Prices . Testimony to the flexibility and ingenuity of u. S. Ebb industry to begin with, but at the same time a lot of the cost deflation is deflation from the Service Companies that performed the drilling on behalf of the oil companies. Theres nothing like a low price to make you a little bit more cost conscious. I think that thats what happened over the twoyear period between the end of 2014 and 2016. So the industry transformed itself, better productivity, concentrated drilling on basins where the output is higher initially. Gina, is that a viable equity play, the u. S. Oil producer . I think were still on the fence now. One of the problems that weve seen, weve seen a tremendous amount of productivity. Yes, theyve gotten very, very efficient. Thats a valid point. Necessity that been the mother of invention, weve seen incredible technological shift in the shale players. Thats been, i think, a positive story. But demand numbers out of the u. S. Have been weak going into the driving season. I think theres still backs up against the wall. Lets talk about when we potentially could see rebalancing. Talking to the iea, they are saying were seeing some degree of rebalancing in parts of the market and that will be every definite. Others say that will not happen until 2019. Where do you sit on this . Rebalancing is a process. Its not the state of affairs so we are rebalancing for Global Oil Supply and demand and opec crude production Going Forward will tend to indicate that the markets in deficit over every quarter to the end of the year. Now, on that basis were looking on average at a 700,000 barrels a day decline in global Oil Inventories this year. Its not enough to bring us back to the fiveyear average, but the rebalancing process is taking place as you subtract excess supply. Why is that not showing through in prices . Why is the transition or the transmission effect so slow . Its back to what we were talking about earlier. I think people want visibility. Its a market far more data dependent. When you look at the beginning of the year, we had producer destocking which allowed ek ports to remain high while production was cut. Oil inventories were sluggish on the down side. The latest data shows the crude draws are gaining momentum. We go into the summer driving season. Refineries will up the through put. So progress is in the making, its just a slow one. To move higher again, theyll have to see the hard facts. I think the market may be confused about all the export versus production numbers. There seems to be a big disconnect when it comes to countries like saudi arabia. Do you think that will close soon . That will have to be addressed at some point. Certainly exports have managed to hold up higher in some countries as a result of exception tal circumstances. So basically thats what were looking at. Now almost six months into the Production Cut we will see exports decline. The deal, the opec deal is a production based deal. Not an export based deal. Harry, what do you think the role of saudi aramco and the ip next year . Saudi has a huge incentive to get prices up by that point. Do you think theres an outlier chance there could be a bigger cut than expected . Thats a really good question. Its true that the ipo is big on the oil markets agenda and were looking towards that in the early part of 2018. Now the higher the price, the greater the revenue, the more money into the sovereign wealth government is looking at as an alternative means for generating revenue for the country. I think it plays a role. Saudi would like to have Higher Oil Prices when the ipo comes around, but i think more importantly now its getting everyone on board to comply and move in that direction of reducing Oil Inventories, thus the rather Extensive Oil diplomacy that saudi has been doing over past days. Just recently the visiting of the oil minister to baghdad to meet with his counterpart. And the saudis need Higher Oil Prices because on a domestic political front they reversed some wage cuts and bonus cuts. They need those prices to go up. Saudi and other Oil Producing countries need a Higher Oil Price. Some more so than others. One could argue that saudi has vast amounts of foreign currency reserves, amongst the largest with china and japan. They could weather the storm of oil prices better than other countries. Agreed this is important in the sense that as you roll back some mentions that you have taken earlier in terms of fiscal consolidation, a Higher Oil Price will help. I want to draw everyones attention to whats happening in the oil market now. Oil prices coming off the session highs. Up a third of a percent, up to 54. 14 for brent crude, and wti up to 51. 43. Harry, do reread anything into this, maybe that the markets have already december counted the extension in . Now its time to sell on the news maybe . Were still waiting on the news, i suppose. Its true we have this consensus that there is going to be a cut that will be announced. The question is for how long. Weve seen some opec delegates suggest up to a year. I dont believe theyll go that far. If they could throw in an addendum of deeper cuts may be considered should Market Conditions warrant it, at least hint at the possibility of more aggressive intervention, that could help oil prices march higher. We have a lot of open interest on the 55 strikes. If we get something positive out of the opec meeting, with a bit of a bullish surprise, wouldnt be surprised that oil prices on brent exceed 55 and hold above. Yet we wouldnt see a repeat of what happened at the november meeting when we saw 15 spike in two trading days. We wouldnt see that . I doubt they would go that far when you look at the level of Fund Participation in the market. Theres been a lot of deleveraging out of oil. People are more cautious. They used to buy on anticipation of what opec would do, now theyre buying on the facts. Sure. Gina you dont think that oil prices will go much higher. Youre short the etf . We think that were recommending an underweight in oil. We really believe that were stuck in a trading range. Until we can really make meaningful improvements on the supply situation, and see the demand situation pick up, both of those are, you know, still not showing enough signs for us, it means were stuck in a trading range. Were at the top of that raeng no range now. The next move is likely down. Were in a raeng nge until we s significant supply cuts. What is the cap for oil here . Some say 60, once we see a ninemonth extension that will entice some u. S. Producers to come back in, maybe even brazil and kazakhstan. Is 60 about right to you . Yeah. I agree. Were going to be trading in a range, perhaps the bnp paribas range is a notch higher, but were in agreement. The cap is determined in our opinion by the incentive given to u. S. Shale producers to come into the market. A lot of the activity in u. S. Shale is based in the permian basin, which is gee logically and from a cost perspective an advantage over others. If the price of oil moves to 60, you will reinvite activity, deployment of rigs to eagle ford and bakken. At that point the upside for u. S. Shale output becomes greater. At that point the market has to count the barrels. Well see if its having too many. If you get into the low 60 area, you get a cap. What were seeing on the screens in just a few seconds here is that the media scrum is about to start. Our very own Steve Sedgwick will be entering the room. He will be putting questions there you go. Thats steve there. Hell put questions to the ministers. Carolyn, llet me pick it up. Well get straight to the Saudi Oil Minister. Where is he . Where is the Saudi Oil Minister . Hes at the top. Lets have a look. Sir pardon me. How are you sir . Are you happy with the way things are going . Do we have consensus in the room . The nine months, sir . Do you have any comment for the world on the way oil prices are going to react to the announcement . That is the Saudi Oil Minister taking the first question in arabic. Well see what we can get in at the moment. A lot of focus on compliance, a lot of focus on how long the deal will be, whether there is a need for deeper cuts as well. How long do the cuts need to be . Is nine months going to do it . We considered yesterday all options from six months to phone mon nine months, to deepening the cut potentially, changes in demand beyond what is the best case. Also supply from nonmember states being on the surprising side. We found out that nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick. In fact, we will do it in six months, but then we would have a season of build in the First Quarter, which could undo what we have done, so we went for the safe bet of extending to nine months. Having said this, the market has many other variables that one may not be able to predict. Are you most concerned about the shale as a variable in this market . Shale is an important variable, but we dont believe its going to significantly derail or affect what we are doing. The market is big enough to absorb the expected production of shale. What about the levels of compliance . What about compliance . Do you have concerns that compliance hasnt been good enough and that saudi has had to fill in the gap to 1the 102 compliance that you have now . If you look at the numbers which are impressive, april above 102 . In may, from my discussions and earlier reports, i think were going to do better than we did in april. Admittedly there are a couple of countries that have not met total commitments. Russia, i understand, is above 300,000. I invite you to go and talk to minister novak. They finally caught up. They had their own issues. Saudi arabia and angola picked up the slack that we have existed by others. But the expectations Going Forward is that everybody will carry their own weight. Do you do you feel nigeria and libya need a cap as well . Libya and nigeria of course are under very difficult circumstances. These are friendly states to us, brotherly states. We have a lot of sympathy with stability and security. We want them to recover in all aspects including the economic wellbeing. Until they reach their historic cap, just like we said for iran, we gave them the chance to catch up to their presanction levels, we will go through the same with libya and nigeria. Has there been a sense at the meeting, you hoped for a ninemonth extension. How difficult has it been to get consensus . We have gotten consensus. My job, i have to admit, has been easy. Theres great solidarity among the members. Everybody sees the benefits and appreciates this productive action. Ive been visiting countries, talking to fellow ministers. Was it difficult with iraq . No, actually iraq was very enthusiastic. Its a Founding Member of opec. His excellency, the prime minister, was firm in assuring me and assuring others who have talked to him that iraq will be in the forefront in supporting opec, supporting groupings of opec and nonopec. And that compliance levels have improved in may. And will continue throughout this level. Iran has talked about growing aggressively the demand of oil, possibly putting out 3 million more barrels a day. Do you feel the tensions will increase between what iran has been producing now and what it has aspirations for doing so, sir . Every country hat right for building capacity and expanding its ability to produce, that includes us in saudi arabia, including iran. So we will not limit countrys investment. For the nine months, i understand theyre on board and they will commit. Beyond nine months we will see what investments go into capacity of iran and well decemb discuss it with them as a member state. Thank you very much. So that was the Saudi Oil Minister. I think he was clear nine months they think they can rebalance the market in that period. As you saw, the secretarygeneral, an old opec hand who has been important in the brokering of the just looking there. Who is there . Lets have a quick word from one or two others. We will speak to the Iranian Oil Minister. Stable market, and for the benefit of consumers. Will the market rebalance the fiveyear average by the end . There are many stories. Give me your version. Opec says that we can extend the level of production based on the decisions for nine months. It seems that that can control the situation and to reach us to the target price that we have in our mind. We know iran has vast reserves and is keen to get International Money and technology into iran and has aspirations to produce 3 million more barrels a day. If youre happy at the current level. How long before iran wants to ramp up above 4 million and beyond . After the new election that we had, now we are we are in more powerful position for continuing policies and strategies in oil market and to sign many contracts for increasing the production. What can you get production to . Our production is very capacity of production is close to 4 Million Barrels on the oil. Do you have any concerns about the more bellicose language were hearing from the u. S. Administration, many different tone out of the white house from mr. Obama and then mr. Trump. Do you have any fears from iran, sanctions and production . I believe these policies, which u. S. Administration what is against u. S. International oil companies. Because it seems that the European Companies are coming to iran and signing the contract with iran, chinese, japanese, koreans, french, but only only u. S. Companies cannot be in iranian market. I dont know why. We prefer to have a contract with International Major u. S. Major oil companies. We have no difficulty. They are limited by their administration. We hope and understand it with this situation that iran has with the level of frustration in election that public intention for good interaction with the International Community is the time i think the u. S. Administration change their position against iranian nation. Thank you very much for your time. Talking about the u. S. Sanctions and basically pointing out, which i think is interesting. Only u. S. Companies face those barriers getting into the iranian market. We understand weve been talking to various countries, various jurisdictions who are keen to develop enormous reserves in iran. Let me spin you around so you can see whats going on. Security is taking us out of here before the ministers carry on their meeting. Its quite a fluid situation, but a wall of burly security men here just pushing us back and back. I think actually this is a good point to hand it back to you in the studio. We heard a little bit from mr. Bakinder, the secretarygeneral, and the Saudi Oil Minister. And the fact that iran is fully on board now, despite aspirat n aspirations to grow production aggressively, theyre on board with the cuts. Lets tell you what happened to oil prices. They dipped quite a bit. Theyre plummeting. Wti crude off 0. 9 price. 50. 90. Brent crude down below the 54 handle. There are some quotes on the wires. Reuters saying the Saudi Energy Minister saying the consensus that deeper cuts are not needed now. He also said there might be a potential extension to the ninemonth deal that may be needed. You can see on the screen clearly we did see that drop. Lets get back to the panel. Harry and gina are still with us what do you make of this drop. Are we reading too much into this . Yes, i think so. Its a normal ebb and flow of the price with the ebb and flow of the news. I think talk of deeper cuts was said by the saudi minister, saudi arabia carries a lot of weight in terms of shaping oil market prices. Well have to wait to see how the rest of the session pans out, and whether we do get a surprise at the end. Yet at the same time he also said deeper cuts were, in fact, discussed. This may be something that might have to happen further down the line. Maybe not at todays meeting, but maybe in a few months time. Its not something they can dismiss offhand. I think if they can get together and weve it into a progress review in terms of the accord theyll have today, where perhaps if the conditions of the market warrant it, they could be on board for a more aggressive restraint policy, that could be good and welcomed in terms of how the market would react to that. For now the line is roll over the current agreements, keep the status quo, and maintain come mroins compliance. Youre not worried about the drop in oil prices now. Youre saying thats the usual ebb and flow as we get the plethora of comments. Its opec day. You will react one way or another to every announcement that comes out. Lets talk more about the Investment Community and speculators out there. Last time we saw this agreement of the Production Cuts, we saw that the Investment Community went long massively. I think that oil long positions were at a record high. Do you think that a ninemonth extension gives the Investment Community enough ammunition, enough time to build up those positions again . Youre absolutely right. When producers first started talking about reducing supply, then eventually agreed on it, we did have Long Exposure to the oil market increase dramatically. Then we also had, with the disappointing inventory numbers or export numbers, deleveraging. The level of speculative length in the markets now are back to the numbers last year before the opec accords. Nine months Forward Guidance demonstrates commitment to the cuts. Whether the market, again, is going to buy into it as aggressively as before, as we said earlier, theyll need to see facts first. We think that again we believe were in a trading range. We think probably the next leg will be a leg down not up. You know, one would assume theres support from the driving season. Like we said, the demand numbers have been disappointing. So we think if you believe those cuts will get extended and that it shows a commitment to continued cuts, which i do agree. That would be positive for the market, we think that investors will be getting a nice entry point, probably a few points down from here. Gina, harry, youll stick around longer. Lets catch a break. Well go for a quick break. Well be back in two. Were seeing that wti crude is off a half percent. 51. 08. Brent crude off 0. 4 . They fell quite dramatically about a half hour ago after we saw comments from Saudi Energy Minister saying that consensus is that deeper cuts are not needed now. Even though he did say that a potential extension to the ninemonth deal is needed. Lets get out to Steve Sedgwick who has come out seemingly unscathed from that media scrum. He joins us from the opec Media Building what are your takeaways . My major takeaways are thank god thats over for another six months. But i thought this was incredibly well orchestrated. Nine months is the message we were getting sense we started talking to ministers from the venezuelans, the iraqis, all of them yes talkiwere talking abou months. Lets listen in to what the Saudi Oil Minister told us about how he thought nine months would be the right remedy to rebalance the oil market. We considered yesterday all options from six months to nine months, to deepening the cut potentially, changes in demand beyond what is the best case. Also supply from nonmember states being on the surprising side. We found out that nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick. In fact, we will do it in six months, but then we would have a season of build in the First Quarter, which could undo what we have done, so we went for the safe bet of extending to nine months. Having said this, the market has many other variables that one may not be able to predict. Was the Saudi Oil Minister who thinks may two the trick. Six months he says will do the trick. You dont think so . No, its a nice try, but he has to leave more ammunition for later. More ammunition for later is what he said earlier on on our show that he thought it would take up to 2019, perhaps beyond to rebalance the market and Big Questions about compliance, Big Questions about the response from u. S. Shale. Lets expand this conversation in the studio. Just one more question for you. Is there a sense on the ground and within the community that opec lost its able to fix prices . In part. In part. Its lost its ability or has less ability to have such bang for the buck on the announcements now. Theres a realization from opec, its a different world in the 21st century. There are people they cannot get on board, not least the xchines. The ability of shale at lower levels, to turn the taps on and off a lot quicker, thats changed the world. Opec realizes that. Lets not underestimate them. Theres still demand out there for this year alone of 97 Million Barrels a day. The world is producing 96. 2 barrels a day. Yes, perhaps diminished in terms of the bang for the buck that you get from an opec announcement but i would never count them out. Its too important. Especially when you add in the likes of the russians and others who are producing significant amounts of oil. Steve there have been some question marks about compliance, especially when it comes to russia. Let me put that question to harry of socgen. Do you think the russians will continue to comply or do a slightly better job . The russians promised a cut by 300,000 barrels a day. They indeed did that. From the onset they said they would do it in a phase manner. I guess the thing with the russians, a lot of Production Cuts they made have come through rosneft, and were facilitated by harsher conditions, field maintenance. And the big question now is how will russia pursue and maintain cuts in the next six months when traditionally supply increases. I think thats a big question mark. But it looks like they wont invest in mature fields as much. Allowing the growth in the newer fields that they developed. That offset will help them keep the status quo. I want to say a big thank you to steve who has done a stellar job at the media scrum. Well let you go for the time being. Thank you also to our guests, harry and gina sanchez. Another quick look at the oil prices. Wti crude down by a half of a percent. 51. 07. Stabilizing somewhat after that initial knee jerk reaction. Brent crude off by 0. 34 . Worldwide exchange is up next. Well see you tomorrow. Good morning. Happening now, wild swings in the oil market as the Saudi Oil Minister tells cnbc that a ninemonth Production Cut could be prolonged if needed. 23 million more people uninsured. Thats what latest analysis of the gops healthcare estimates if the bill becomes law. The detail ahead. And trump at nato. The president is in brussels to meet the organization he once called obsolete. A live report from belgium coming up. Its thursday, may 25, 2017. Worldwide exchange begins right