OPEC, Russia nearing accord on long term oil supply coordination

OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction. (Reuters)
Updated 14 June 2019

OPEC, Russia nearing accord on long term oil supply coordination

  • OPEC+ due to meet on June 25-26 or in early July to decide whether to extend the output cut
  • OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes

MOSCOW: OPEC and other producers including Russia are in final talks for an agreement, that may be signed in early July, to cooperate on oil supplies on a long-term basis, Japan’s Nikkei reported, citing Russian energy minister Alexander Novak.
Novak also told the Nikkei that discussions with OPEC on moving the date of the meeting to early July from the originally-planned dates of June 25-26 were nearly finalized.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have since January 1 implemented a deal to cut output by 1.2 million barrels per day to support prices.
The alliance, known as “OPEC+,” was due to meet on June 25-26 or in early July to decide whether to extend the pact.
A proposal to create a formal body was abandoned earlier this year after the US Congress started moves to legislate against cartels in the oil industry.
But the Nikkei said the group was trying to make OPEC+ a permanent framework under an accord to be signed at the next meeting.
The report did not say whether Russia is willing to agree to extend the agreement on output reduction.
OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction, building a case for supply restraint through the rest of 2019.
Crude oil prices jumped 4 percent on Thursday after suspected attacks on two oil tankers in the Gulf of Oman sparked tensions between the United States and Iran and raised concerns over the safety of oil shipments through one of the world’s busiest sea lanes.
Prior to this latest scare, some OPEC members had been worried about the recent steep slide in prices, which have tumbled to $62 a barrel from April’s 2019 peak above $75, due to concern over the US-China trade dispute and a global economic slowdown.
OPEC said, in a monthly report published on Thursday, that world oil demand would rise by 1.14 million barrels per day (bpd) this year, 70,000 bpd less than previously expected.


Oil recoups losses as OPEC, US Fed see robust economy

Updated 14 November 2019

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.

HIGHLIGHT

  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.