Oil stocks to buy ahead of next OPEC meeting
- Author: Eleanor Harrison Oct 12, 2017,
Oct 12, 2017, 0:29
Rising supply from the USA and from other producers outside of the deal, as well as recovery of production in exempt OPEC members Libya and Nigeria, have been offsetting much of the OPEC/non-OPEC production cuts.
Oil prices were stable early Tuesday with OPEC pointing to a rebalancing market even as the USA looked forward to getting production back following Hurricane Nate.
Saudi Arabia said it pumped 9.97 million barrels per day in September, up about 22,000 barrels per day from August, but below its OPEC target. The cuts have helped revive crude, which had fallen to half its 2014 peak. It said that Aramco planned to supply 7.15 million barrels a day, "despite a very strong demand", which exceeds 7.7 million barrels a day. But, the oil group soon moved to curb production-along with other oil producing nations-in late 2016.
OPEC, along with other producers including Russian Federation, agreed to cut output by 1.8 million barrels per day (bpd) through March 2018 to balance the market. Should Opec keep pumping at similar levels to September, the market could move into a deficit next year, the report indicates.
Increasing demand for oil will be matched by added supplies, but Opec's forecasts for the balance of supply and demand foresee a greater reliance on the cartel's output.
After oil tumbled below $30 a year ago, Opec shifted strategy with the production pact that has seen prices recover to fluctuate in the $50-55 range.
However it doesn't see prices climbing soon.
Oil prices also gained support by the International Monetary Fund's prediction that global economic growth is expected to be 3.6% this year and 3.7% next year.
"A rise above that level would encourage U.S. oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction" in investments, it added.
OPEC Secretary-General Mohammed Barkindo called on United States shale oil producers to help support plans to curb global oil supply on Tuesday, warning that unprecedented measures may be necessary next year to rebalance the oil market. The main U.S. contract, WTI, was at $51.30.