Tags: opec | oil | supply | curbs | 2018

OPEC Likely to Keep Oil Supply Curbs for All of 2018: Sources

OPEC Likely to Keep Oil Supply Curbs for All of 2018: Sources
Gumpanat-Thavankitdumrong/Dreamstime

Wednesday, 01 November 2017 01:16 PM

OPEC is likely to stay the course by keeping its current curb on oil production in place for the whole of 2018 despite potential output disruptions next year, Gulf OPEC sources said.

The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers, have cut overall output by about 1.8 million bpd since January. The pact runs to March 2018, but the producers are considering extending it.

OPEC is scheduled to next meet at its headquarters in Vienna on Nov. 30.

Venezuela’s oil production, which has been falling by about 20,000 barrels per day per month since last year, is on track to fall an additional 240,000 bpd next year as U.S. sanctions and a lack of infrastructure investment hobbles operations.

Oil flow from other OPEC members such as Nigeria and Libya continue to see supply disruption.

But Saudi Arabia and OPEC are unlikely to raise output elsewhere next year to compensate for this decline as the exporting group wants to remain focused on reducing the level of oil stocks in OECD industrialized countries to their five-year average, one OPEC source familiar with Saudi thinking on its oil policy said.

“OPEC is likely to stay the course for the rest of 2018. We want to see commercial stocks going down,” the source said.

Another OPEC source said there was a high risk of a supply drop from Venezuela next year but that does not necessarily mean that OPEC will raise output elsewhere to make up for the decline.

The first OPEC source said that output from the Latin American OPEC nation could fall in 2018 by 300,000-600,000 bpd, adding that the risk of supply disruptions from other OPEC producers such as Libya and Nigeria also remained high.

“The feeling in OPEC is that $60 (a barrel) should be the floor for oil prices next year,” the first source said.

The market has been concerned that once the supply cut deal comes to an end producers will increase supplies again, causing prices to fall.

But Saudi Energy Minister Khalid al-Falih last week raised the prospect of prolonged restraint once the pact ends, as the world’s top oil exporter Saudi Arabia is determined to reduce inventories further through the OPEC-led deal.

Saudi Crown Prince Mohammad bin Salman told Reuters last week that the kingdom supports the idea of extending the OPEC-led pact.

Brent crude futures were up 55 cents at $61.49 per barrel at 1210 GMT, having hit a session peak of $61.70 earlier, the highest since July 2015.

U.S. West Texas Intermediate (WTI) crude was up 56 cents on the day at $54.94 a barrel.

The oil price gained 7 percent in October, marking the fourth consecutive month of gains.

"The bulls have it and momentum is strong," Saxo Bank senior manager Ole Hansen said.

"We know how oil can easily run ahead of what is fundamentally justified and we've seen that in both directions in the last couple of years," he said. "We really need to see demand growth pick up even more strongly than what is currently expected for the bullish outlook for to be maintained."

© 2021 Thomson/Reuters. All rights reserved.


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OPEC is likely to stay the course by keeping its current curb on oil production in place for the whole of 2018 despite potential output disruptions next year, Gulf OPEC sources said.
opec, oil, supply, curbs, 2018
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2017-16-01
Wednesday, 01 November 2017 01:16 PM
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