Low gas prices will mean more road trips this summer
- Author: Zachary Reyes Jun 04, 2017,
Jun 04, 2017, 9:53
European stocks are likely to drift lower at the start of trading Friday as investors react to yesterday's OPEC agreement on production limits and keep a stern eye on political developments in the United States. Although all the OPEC players and not- members of the OPEC community are hoping that this cut down should be sufficient to regain the necessary balance in the oil commodity pricing by the end of this year, but still this can not be confirmed due to increasing in the production of Shell gas by the US.
"There seems to be a little resistance on the price at US$55/bbl, but if OPEC members and a selection of non-OPEC members - notably Russian Federation - abide by the supply cut, the price could conceivably hit US$60/bbl by year end".
"Malaysia views such steps, in the long term, would positively impact more economies for both producers and consumers alike in achieving the sustainable development agenda". The move also highlights heightened volatility in the oil market.
This week, OPEC members (and some non-OPEC members) met in Vienna, Austria to discuss extending production cuts to help stabilize the price of the precious commodity, amid two years of soft oil prices stemming from a supply glut which has ballooned in recent years.
Clawing back some of Thursday's losses, global benchmark Brent futures LCOc1 were up 28 cents at $51.74 a barrel at 0837 GMT. But it also spurred growth in the US shale industry, which is not participating in the output deal, thus slowing the market's rebalancing.
However, an exemption would automatically undermine OPEC's effort to push up prices by extending the cut agreement, OilPrice indicated.
The American shale producers would have been the unintended beneficiaries of deeper production cuts even if such cuts would have succeeded in the OPEC-led group's objective of getting commercial stocks of crude oil down.
OPEC accounts for a third of global oil production and includes numerous world's largest oil exporters such as Saudi Arabia and Qatar. Rising U.S. production could completely replace OPEC's output cuts of 1.2 million bpd by year-end, according to RBN Energy. USA crude sank almost 4.8 percent on Thursday on disappointment that OPEC and the other producers weren't more aggressive in extending their output cuts.