Finance

OPEC panel to conclude meeting on Friday

OPEC panel to conclude meeting on Friday

OPEC may get its members to agree to continue to tamp down oil production, but it will be a Pyrrhic victory. OPEC will be meeting the other oil producers on May 25 to choose the augmentation.

"The main, critical element in this market is the Saudi Aramco IPO", Bodhi Ganguli, lead economist at Dun & Bradstreet, told MarketWatch in an interview.

Saudi and Russian Federation produce a combined 20 million barrels of crude oil a day - about one-fifth of global consumption - and other oil-producing nations are expected to follow their lead over cuts, the BBC reported.

Still, the patchy evidence of draining storage has fallen far short of what investors expected after OPEC and non-OPEC nations agreed on production cuts last November. The increase, OPEC said, represents the biggest increase among countries within the oil producers' group.

OPEC and its allies can only hope that increased USA production won't jeopardize its aim of bringing down global crude stockpiles to the five-year average-putting a floor under prices and making sure they don't plummet.

Markets yawn as Russia, Saudi Arabia envoys tease extending crude oil production quotas into 2018.

"This is what we have built into our price forecast for the year", he said.

West Texas Intermediate rose 28 cents to $49.35 per barrel, the highest climb since April 26, while Brent increased 30 cents to $52.51 per barrel.

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'Even if we extend the cuts just at the current level, they should be enough to support the price in the range that we're looking at-about $55 a barrel/ for Brent.

Specifically, the country's crude oil production increased from 1.210 million bpd recorded in March to1.484 million bpd in April. Prices are up 4.5 percent this week, heading for a second weekly gain. Given all of that, this "baseline" scenario makes sense. Riyadh and Moscow say they should be extended until March 2018.

Earlier today, Reuters reported that an OPEC panel tasked to discuss options for the cartel cuts extension ahead of next week's meeting in Vienna is studying deeper cuts.

"On the whole, we believe the Company's decision to sell its jack-up fleet and newbuilds to Borr Drilling is negative as we expect a pick-up in demand for these assets before drillships and semisubmersibles, ' the report said".

Overall, he sees this outcome as unlikely, with a 15% probability.

"All options are open", one source said. Basically, shale production has made the United States a swing producer, and President Trump has been most helpful to the petroleum industry in the U.S. But U.S. oil producers are not paying any attention to the plea, and the number of rigs has more than doubled over the past year. That should help tighten the oil market and push up prices as demand rises gradually this year, he said.

In contango, today's oil prices are cheaper than prices in the future. But for Saudis the deal will also be for political expedience.


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