Regarding to OPEC, stiffer market in 2017 is expected; Saudi Arabia said to be trying to support it.

Regarding to OPEC, stiffer market in 2017 is expected; Saudi Arabia said to be trying to support it.
Regarding to OPEC, stiffer market in 2017 is expected; Saudi Arabia said to be trying to support it.
Friday July 15, 2016

The latter monthly report of the organization of the Petroleum Exporting Countries (Opec) restates its prediction that crude request in 2017 will be higher than its present production – but it also claims, Brexit and other factors will slow the pace of demand growth.

The cartel pegs the 2017 increase in global oil demand at 1.15 million barrels per day (bpd), slightly less than this year’s expected growth of 1.19 million bpd.

Meanwhile, OPEC’s oil output grew 264,000 bpd to 32.86 million bpd in June, and it foretells that demand for its crude next year will average 32.98 million bpd – meaning if OPEC does not increase output more, a supply deficit could occur.

For the record a research released OPEC’s June production rate to be 32.73 million bpd, and although this is slightly less than the cartel’s official figure, it is still the biggest amount of output since August 2008 – and has observers wondering if talk of a production cap will revive should this level be preserved.

The OPEC report shows an average surplus of 1 million bpd for 2016, but growing demand coupled with supply from outside producers expected to decline by 110,000 bpd in 2017 (compared to an 880,000 bpd drop this year) will help remove overall excess oil stocks in 2017.

While OPEC looks like to be taking the prospect of a tighter 2017 market in stride, OPEC officials told that its biggest exporter, Saudi Arabia, could be getting ready for the future by trying to sustain the market. The oil minister for the kingdom recently stated that in order to be achieved a balance in oil markets in the long term the oil price should be between 50 and 100 US dollars. Whereas before was not mentioned range of prices that were being looked for.

Another official claimed that a fair price of oils needed to have enough investment to avoid a supply crunch and a boost in prices a few years from now. And it is good that the Saudis are realizing this, after huge losses for oil exporters.

The International Energy Agency last month told that world oil output in 2017 will almost match consumption and thus end many years of oversupply; on the other an analyst pointed out that for a shortfall to be avoided, OPEC members many of whom are struggling to keep current production will have to pump an extra 650,000 barrels a day over the year.


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