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OPEC's all-options strategy not enough to lift the price of oil
by Daniel J. Graeber
Washington (UPI) Aug 24, 2017

OPEC: "All options" on the table to ensure market balance
Washington (UPI) Aug 24, 2017 - A joint committee monitoring an OPEC-led effort to balance the markets said Thursday that "all options" are on the table to ensure a positive outcome.

Members of a joint committee monitoring a deal implemented in January to prop up a market facing negative pressure from supply-side strains said the effort is working. In a statement, the committee said it "took note of the recent market development and expressed confidence that the oil market is moving in the right direction towards the objectives of the declaration of cooperation."

OPEC and non-member states like Russia agreed to sideline almost 2 million barrels per day in production in an effort to erase the surplus for the five-year average of global crude oil inventories. Total global inventories remained skewed toward the supply side, however, and the inventory level in the United States, the world's leading economy, is still about 20 percent above the five-year average, though that's down 40 percent in early February.

On the demand side, the monitoring committee said that while collective output was curtailed, global oil demand for 2017 was stronger than expected and on pace to rise even further next year. Nevertheless, crude oil prices have been stuck in a narrow range and are more or less unchanged from this date last year. The overall OPEC-led effort, meanwhile, faces internal threats from Libya and Nigeria, two strong producers exempt from the agreement because of national security issues.

"All options, including the possible extension of the declaration of cooperation beyond first quarter 2018, are left open to ensure that all efforts are made to rebalance the market for the benefit of all," the monitoring committee said.

Oil markets were pressured last year by strong U.S. oil production and a previous OPEC policy to defend its market share with robust output. The Texas Alliance of Energy Producers said that, with shale producers growing accustomed to life at $50 per barrel, the "production curtailments did not achieve the desired price outcome."

Meanwhile, the monitoring committee said compliance was 94 percent, lower than in previous months. Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI the deal was working, but rising production from Libya, Nigeria and the United States, "together with reduced compliance, has reduced the positive impact of solid demand growth."

The monitoring committee added it was keen on inviting Libya and Nigeria to the next round of meetings.

Oil prices fell flat early Thursday as questions about OPEC's efforts to balance the market overshadowed possible U.S. offshore production issues.

Crude oil prices rallied Wednesday after the U.S. Energy Information Administration issued a report indicating further drawdowns in U.S. crude oil and gasoline inventories, a sign the market in the world's largest economy was starting to balance out.

Geoffrey Craig, the oil futures editor for pricing group S&P Global Platts, said the U.S. oil supply surplus has been cut from about 40 percent to 20 percent since early February.

"But traders already appear to be looking ahead to next month, when crude stocks typically build as refinery demand fades when units are taken offline for the fall maintenance period," he said in an emailed report.

Members of the Organization of Petroleum Exporting Countries and a handful of other producers, meanwhile, are working to erase the oversupply with production cuts of their own. A monitoring committee said Thursday that "all options" were on the table to ensure the measure works as planned.

Discipline is deteriorating, however, as reported compliance with the deal has moved lower since June. Kazakhstan, a non-member state contributor, is on pace to produce more from its flagship Kashagan oil field and an emailed report from London oil broker PVM said waning compliance is a "very real possibility."

The price for the basket that makes up Brent crude oil, the global benchmark, was down 0.42 percent at 9:18 a.m. EDT to $52.35 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.87 percent to $48 per barrel.

Questions about OPEC overshadowed the closure of some installations in the U.S. Gulf of Mexico in response to Tropical Storm Harvey, which could hit the southern coast of Texas as a hurricane by late Friday. About 20 percent of the total U.S. crude oil production is centered in the Gulf of Mexico and four installations are already shut in by the storm.

On the economic front, the U.S. Labor Department reported first-time claims for unemployment increased 2,000 from last week and the previous week's numbers were revised higher by 1,000, though the four-week moving average, a less-volatile measurement, was down 2,750 from the previous week.

Elsewhere, the broader markets are watching as the world's central bankers kick off their annual meeting in Jackson Hole, Wyo., late Thursday morning. Investors will look at any statements there for a broad assessment about the health of the overall economy.

ExxonMobil misled public on climate for decades: study
Paris (AFP) Aug 23, 2017
US oil giant ExxonMobil knowingly misled the public for decades about the danger climate change poses to a warming world and the company's long-term viability, according to a peer-reviewed study released Wednesday. An analysis of nearly 200 documents spanning decades found that four-fifths of scientific studies and internal memos acknowledged global warming is real and caused by humans. ... read more

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