"Opec's ability to control oil price 'diluted' by US" - Cantor Fitzgerald Europe
- Author: Zachary Reyes Jun 01, 2017,
Jun 01, 2017, 10:13
OPEC countries agreed to extend a policy to cut around 1.8 million barrels per day (bpd) until the end of March 2018, extending a deal that would have expired in June this year.
European stocks are mixed in mid-day trading Friday following disappointment that Thursday's OPEC meeting failed to produce bigger supply cuts.
The decision extends a cut of 1.2 million barrels a day by OPEC.
"Less OPEC oil on the market enhances the opportunity for American energy to fill needs around the world, and will help us achieve energy dominance", Sitton said.
"Malaysia welcomes the decision agreed today and reaffirms its commitments to today's agreement and wishes the cooperation to be successful", he added.
While Opec's move had been expected, some oil market investors had hoped producers would agree to longer or deeper cuts to drain a global glut of oil.
Less oil on the market normally means higher value per barrel.
OPEC was under pressure from oil producers to reduce crude oil stockpiles from their current level at 3bn barrels to their long-term average of 2.7bn barrels.
WTI Crude Oil (Nymex) for June, tumbled 4.79 percent to settle at Dollars 48.90/barrel.
As OPEC extended its oil production cut, the cartel has retained its position as a "swing producer" in the global market, a leading oil analyst said Friday.
"The U.S. shale producer does what everyone thought was impossible". The coalition of 24 countries making the deal will also likely have difficulty curbing the effect of shale oil production out of the USA and other non-OPEC countries not agreeing to production cuts.
Making the long oil trade all the more hard is that high US oil inventories mute the impact of output reductions by OPEC and other countries, indicating that oil bulls need to focus on other factors.
With no data due from Europe today, the focus will be on the USA this afternoon as we get the first GDP revision, durable goods orders and the latest consumer data from University of MI.
Oil at $50 a barrel has encouraged more US shale output, since production costs are down from a few years ago.
The upshot is that the price of oil - and derived products like fuel - is unlikely to increase much in coming months.
That could increase supplies and drag down prices again.