OPEC Decides to Decrease Output, but some members will produce ¡¢at highest levels that make sense¢¢.

OPEC Decides to Decrease Output, but some members will produce ¡¢at highest levels that make sense¢¢.
OPEC Decides to Decrease Output, but some members will produce ¡¢at highest levels that make sense¢¢.
Thursday September 29, 2016

The Organization of the Petroleum Exporting Countries (OPEC) today at an unofficial meeting in Algeria has agreed to reduce crude production, the first such segment since 2008.

Two sources said that production will be decreased to 32.5 million barrels per day from the presently 33.24 million barrels per day, even though some sources said that output is currently at record high of 33.7 million barrels per day.

The individual output limits for each member will probably be decided in November, but it seems some members will not participate in the deal, such as Nigeria, Libya and perhaps Iran, would be allowed to produce at highest levels that make sense.

What that maximum level might be is not clear, but an Iranian government official said that under the agreement his country would limit production at close to 4 million barrels per day, up for its current 3.6 million barrels per day.

As a result of the deal crude prices jumped over 5 percent, which possibly was a surprise to many analysts who had crossed off any chance of a deal taking place. Especially when the information refer to a simply consultative meeting in Algiers without taking any action. An unexpected progress that no one saw it coming, as the fundamentals in the U.S.A are already tighter than were expected and is due to get tighter an analysts revealed.

On the other hand many analysts have said that oil glut is expected to continue regardless of any OPEC deal. Whereas other researchers see positive these news, and this could be potentially very significant, not for the barrels that could be removed from the market but because it’s a signal that the Saudis could be returning to active supply management and that’s the bottom line.


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