Oil ETFs And OPEC Meet Again
- Author: Zachary Reyes Jun 02, 2017,
Jun 02, 2017, 8:50
The cartel and non-member exporters agreed to extend the existing oil output curbs of around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018.
Here is an account of what the deal entails for oil producing and consuming nations.
"We considered various scenarios from six to nine to twelve months and we even considered options for higher cuts". Crude oil prices were trending higher ahead of Thursday's meeting in Vienna and the US shale oil sector was responding, reaching 9.3 million barrels per day last week, up 5.8 percent year-on-year. Two sources close to the matter told Bloomberg that starting next month, Saudi crude supplies to American importers will be reduced to below one million barrels a day next month - a 15 percent decrease from the monthly average so far in 2017.
OPEC announced the agreement to cut oil production in November, but surging USA output, weak fuel demand and persistently robust OPEC exports in the first half of the year offset those reductions.
"There are number of oil market variables which could play out over the course of the second half of the year".
According to Business Insider, with 19 straight weeks of rig additions and oil near $50 a barrel, producers are clearly more confident in market conditions than they were a year ago.
"From the point of view of OPEC, if they want to stabilise or increase the price they would have to extend of deepen the cuts".
West Texas Intermediate for July delivery was at $49.11 a barrel on the New York Mercantile Exchange, up 21 cents, at 8:24 a.m.in London.
Gaining back some of the losses, Brent crude futures were up 0.56 percent to $51.75 per barrel as of 9:45 am GMT on Friday.
That's because US shale oil producers have taken advantage of the uptick in prices since past year to ramp up production.
Ann-Louise Hittle, vice president at energy consultancy Wood Mackenzie said the "decision in Vienna sends a signal of continued support for oil prices from OPEC which helps USA onshore drillers make plans" to further increase their production. But this seems to fail miserably to have a change in demand for the product leading to decrease in oil prices.
The alliance between OPEC and non-OPEC producers is strong, but not strong enough to derail production momentum from North America, analysis finds.
But investors had been hoping the oil producers would go further.