Medical and Hospital News  
OIL AND GAS
OPEC deal more about balance than price
by Daniel J. Graeber
New York (UPI) Dec 1, 2016


Oil rally continues after OPEC deal
New York (UPI) Dec 1, 2016 - Crude oil prices staged another rally one day after OPEC agreed to a production cut that would erase what it sees for global demand growth if implemented.

Despite early doubts it was possible, members of the Organization of Petroleum Exporting Countries reached an agreement to set a target production of 32.5 million barrels per day "in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward."

A surge in crude production from U.S. shale, Russia and a post-sanctions Iran helped push markets heavily toward the supply side, sending oil prices crashing below the $30 mark in early 2016. If implemented, the OPEC agreement would cut what the 14-member group said it expects for demand next year.

Crude oil prices shot up nearly 10 percent in the wake of the agreement and the enthusiasm spilled over into Thursday trading. The price for Brent crude oil was up 2.9 percent to start the trading day at $53.36 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was up 2.8 percent to $50.84 per barrel for one of its strongest starts for the year.

Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said the agreement has a number of flaws, ranging from exemptions for once major contributors like Libya and Nigeria to uncertainty about Russia's role in the agreement. Nevertheless, the agreement helps ease some of the supply-side pressures holding oil prices back.

"The supply and demand is therefore not going to be as tight as OPEC portrays it, but it will still be a meaningful cut of supply that will accelerate the global rebalancing," he said.

Much of the recent gains in oil prices have come from rhetoric alone. If compliance with the deal is uncertain, however, it could erase some of the optimism supporting the current rally. If oil prices move too high, meanwhile, operators in expensive shale basins in the United States will return to work and contribute to the oversupply.

For the economy as a whole, the U.S. Labor Department said first-time claims for unemployment for the week ending Nov. 26 increased 17,000 and the less volatile four-week moving average gained 500 from the previous estimate. That followed a report earlier in the week that showed the U.S. economy had grown faster than during the second quarter.

An OPEC agreement to limit oil production for the first time in nearly a decade does more to erase a market surplus than support higher prices, analysis finds.

Members of the Organization of Petroleum Exporting Countries concluded meetings in Vienna with an agreement to cut production by 1.2 million barrels per day to align with a proposal put forward in Algeria. That cut matches what OPEC expects for world oil demand growth through next year.

The proposed cut is contingent on a number of factors, including cooperation from non-member states like Russia. On the back of the news, crude oil prices staged one of their largest rallies in years, with the price for Brent at one point surging 10 percent in midday trading Wednesday.

A research note from Goldman Sachs said that while the guidelines are substantial, a true catalyst for a major rebound in crude oil prices would have to come from verified compliance and more clarity from member states like Iran. Goldman said there are conflicting narratives on cooperation from some OPEC producers.

"We reiterate our view that this is a short duration cut, targeting excess inventories and not high oil prices, which would instead unleash a sharp production response both in the United States and in the rest of the world," the note read.

Before the deal was reached, Qatari Energy Minister and OPEC President Mohammed Bin Saleh al-Sada said there were signs the market situation was returning to balance. Data from the U.S. Energy Information Administration show total crude oil stocks relatively unchanged from the last week in October, suggesting market pressures were indeed correcting some of the supply-side pressures that dragged oil prices to below $30 per barrel in early 2016.

Fitch Ratings in a research note said the oversupply should erode through next year as supply and demand start to balance out. With questions lingering still over which country will do what under the agreement, and how much output countries exempt from the deal like Libya and Nigeria can contribute, the ratings agency said there are risks the OPEC production agreement won't work as planned.

"Significant risk remains that OPEC members will produce crude above quotas, as has happened in the past," it said. "This could slow market rebalancing."


Comment on this article using your Disqus, Facebook, Google or Twitter login.


Thanks for being here;
We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain.

With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords.

Our news coverage takes time and effort to publish 365 days a year.

If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor
$5 Billed Once


credit card or paypal
SpaceDaily Monthly Supporter
$5 Billed Monthly


paypal only


.


Related Links
All About Oil and Gas News at OilGasDaily.com






Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

Previous Report
OIL AND GAS
Oil-rich Alberta nearing end of recession
Edmonton, Alberta (UPI) Nov 29, 2016
A rebound in crude oil prices and recovery in the sector in general means the economy in Alberta province is primed for growth, the finance minister said. The province was scorched by wildfires in May, which idled about 1 million barrels per day worth of regional oil production. The net impact on the provincial economy of about $387 million, plus lower crude oil prices, meant Alberta wa ... read more


OIL AND GAS
UT professor develops algorithm to improve online mapping of disaster areas

Ukraine to unveil giant new safety dome over Chernobyl

13 held over China power plant collapse as toll hits 74: media

Timeline of Chernobyl nuclear disaster

OIL AND GAS
High-Precision System for Real-Time Navigation Data of GLONASS Ready for Service

Launch of new Galileo navigation quartet

How NASA and John Deere Helped Tractors Drive Themselves

Flying the fantastic four

OIL AND GAS
The role of physical environment in the 'broken windows' theory

Scientist uses 'dinosaur crater' rocks, prehistoric teeth to track ancient humans

Genes for speech may not be limited to humans

Traumatic stress shapes the brains of boys and girls in different ways

OIL AND GAS
A reindeer's perilous journey in Swedish Lapland

US rancher allowed to hunt mountain lion behind alpaca slaughter

Indian court bans firecracker sales in smog-hit Delhi

Diversity without limits

OIL AND GAS
El Nino conditions in the Pacific precedes dengue fever epidemics

Worrying traces of resistant bacteria in air

Rift Valley Fever epidemic kills at least 32 in Niger

HIV treatment soars, but young African women suffer: UN

OIL AND GAS
Fat lady sings for Chinese rural opera

China to control public smoking nationwide by year-end

Dalai Lama visits Mongolia over China's objections

Eight dead in fighting in Myanmar town on China border

OIL AND GAS
African leaders tackle piracy, illegal fishing at Lome summit

US to deport ex-navy chief drug trafficker to Guinea-Bissau

Gunmen ambush Mexican military convoy, kill 5 soldiers

Mexican army to probe killings of six in their home

OIL AND GAS
Property and credit booms stablise China growth

China data and US banks propel equities higher

No debt-for-equity cure for zombie firms, says China

China's ranks of super-rich rise despite economic slowdown









The content herein, unless otherwise known to be public domain, are Copyright 1995-2024 - Space Media Network. All websites are published in Australia and are solely subject to Australian law and governed by Fair Use principals for news reporting and research purposes. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA news reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. All articles labeled "by Staff Writers" include reports supplied to Space Media Network by industry news wires, PR agencies, corporate press officers and the like. Such articles are individually curated and edited by Space Media Network staff on the basis of the report's information value to our industry and professional readership. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. General Data Protection Regulation (GDPR) Statement Our advertisers use various cookies and the like to deliver the best ad banner available at one time. All network advertising suppliers have GDPR policies (Legitimate Interest) that conform with EU regulations for data collection. By using our websites you consent to cookie based advertising. If you do not agree with this then you must stop using the websites from May 25, 2018. Privacy Statement. Additional information can be found here at About Us.