Opec Likely to Extend Supply Cuts to Rebalance Market

15 November, 2017, 02:02 | Author: Salvatore Jensen

Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.

"It would have been hard to try to rebalance the market alone and so I think there is a rationale for this group to stay together... and maybe even expand", the UAE's minister said at the Abu Dhabi International Petroleum Exhibition Conference (ADIPEC), as quoted by CNBC.

Investors already are assuming Opec and its allied producers will agree at the end of this month to extend the limits well beyond their March expiration, Morse said at a gathering of energy economists in Houston on Monday. The largest Arab oil producer outside of Opec expects crude to stay above US$60 a barrel and sees stable prices next year, Al Rumhy said in an interview.

OPEC and other non-OPEC producers will meet on November 30 in Vienna to decide on oil output policy.

Despite expectations for uptick in US output, traders remained confident that Opec's output curbs would continue to support upside momentum in crude prices ahead of the upcoming Nov, 30 Opec meeting, at which it's widely expected that Opec will extend its global accord on production cuts beyond March.

Opec raised estimates for the amount of crude it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report yesterday from the group.




OPEC Secretary-General Mohammad Barkindo, speaking at the same event, said participants in the deal were committed to achieving market stability.

Stocks were 154 million barrels above the five-year average, the excess that OPEC aims to eliminate.

Brent crude futures settled down 36 cents, or 0.6 per cent, at $63.16 a barrel while U.S. West Texas Intermediate (WTI) crude futures settled up 2 cents a barrel at $56.76.

Despite the Middle East tensions and OPEC-led supply cuts, traders were cautious in betting on further price rises, not least because of an increase in US drilling for new production.

Additionally, traders said it was unclear whether a strong natural disaster that hit Iran and Iraq on Sunday had affected the region's oil production.

Bahrain said over the weekend that an explosion that caused a fire at its main oil pipeline on Friday was caused by sabotage.

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