Crude below $50 as OPEC disappoints with 'safe bet' extension
- Author: Zachary Reyes May 29, 2017,
May 29, 2017, 3:58
The U.S. West Texas Intermediate crude July contract was at $50.50 a barrel by 7:00AM ET (11:50GMT), down 86 cents, or around 1.7%.
While low prices were welcome news to firms and to consumers filling up their cars, they blew a hole in the finances of oil-producing nations, even rich Gulf countries, to say nothing of on-the-brink Venezuela.
The group of top producers agreed to slash output in November in an attempt to reduce a global oil glut and boost prices.
US oil production has already risen by more than 10 percent since mid-2016 to more than 9.3 million bpd, and OPEC's contribution to the cuts - 1.2 million bpd - could be completely eaten up by rising USA production by year-end, according to RBN Energy.
"A nine-month extension would have little impact on our price forecast for 2017, which is for an annual average of $55 per barrel for Brent", the report read.
Oil prices tumbled 5 percent on Thursday as the extension of output curbs by OPEC and other producing countries disappointed investors who had hoped for larger cuts, leading to the biggest daily percentage slide in crude prices since early March.
"A nine-month extension of the output cuts is already baked into prices", said Olivier Jakob, energy markets analyst at Swiss consultancy Petromatrix.
OPEC is painfully aware of its diminishing power to influence the market as shale producers gain more clout.
Non-OPEC producers including Russian Federation also agreed to cut production through March, said Bijan Namdar Zanganeh, Iran's minister of petroleum, according to Bloomberg.
In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.
Oil cartel Opec made a decision to extend cuts to production until March 2018, according to reports. Rumors had circulated earlier in the trading week that deeper cuts were on the agenda.
The post Nigeria to maintain crude output as OPEC extends crude cut appeared first on Vanguard News.
Oil prices fell almost 5 percent today as OPEC's decision to extend production curbs fell short of expectations of deeper or longer cuts.
OPEC oil ministers were continuing their discussions in Vienna after three hours of talks.
"There have been suggestions (of deeper cuts), many member countries have indicated flexibility but. that won't be necessary", he said, adding that global stocks were falling and Saudi exports declining.
That deal is due to expire end of June and is likely to be extended at Thursday's meeting of OPEC and non-OPEC ministers.