OPEC may extend cuts by more than three months

Sep 14, 2017, 00:16
OPEC may extend cuts by more than three months

The longer-term focus, however, was on a possible extension to the 15-month production pact between members of the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russian Federation. According to the report, demand grew by 2.3 million barrels per day (mb/d), or 2.4 percent, in the second quarter of 2017, this has prompted the IEA to increase its growth estimate for the year to 1.6 million barrels per day. That marks a 79,100 barrel-a-day drop from July.

Overall, the IEA said robust global demand and an output drop from the Organization of the Petroleum Exporting Countries and other producers should help balance inventories.

An OPEC-led supply cut deal is helping rebalance the global oil market, OPEC's secretary-general said on Monday, noting that higher demand in the rest of this year should lead to further reductions in oil inventories.

"This first stirring of backwardation since oil prices were above $100 a barrel is seen as a sign of tightening supplies and strong demand".

Much of that was because of a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption.

Venezuela Energy Minister Eulogio del Pino said on Friday that global oil inventories remain too high and urged producers to look at exemptions granted to countries such as Libya and Nigeria.

The OPEC of which Saudi Arabia is the leader, and other producers including Russian Federation, have agreed to trim their output by almost 1.8 million bpd until next March. However, both these members of the cartel restored output quicker than anticipated.

The EIA also said refinery crude runs fell by 394,000 barrels per day.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.656, down less than a penny, from $2.661 a week ago and up about 30 cents per gallon compared with the month-ago price.

The OPEC's report also announced Iran's oil output based on direct communication.

International Energy Agency has increased its growth estimate for the year to 1.6 million barrels per day. The countries will meet in November to decide whether the curbs need to be extended past their scheduled expiry in March. It raised the 2018 forecast the most, by 400,000 bpd to 98.1 MMbpd.

The near term action in oil prices will depend on how prolonged will be the impact of Hurricane Harvey on USA oil infrastructure.

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