Subscribe to our free daily newsletters
  Oil and Gas News from OilGasDaily.Com  

Subscribe to our free daily newsletters

Oil prices get modest lift from OPEC, but pressures linger
by Daniel J. Graeber
New York (UPI) Feb 16, 2017

OPEC cuts not doing the job, analyst says
Zurich, Switzerland (UPI) Feb 16, 2017 - Production cuts from the Organization of Petroleum Exporting Countries aren't enough to cut global crude oil supplies, a market analyst said Thursday.

OPEC members, and coordinating non-member states, last year agreed to hold production levels steady in an effort to erase a glut of oil on the market. An oversupplied market last year pushed oil to historic lows and OPEC's agreement is aimed at restoring balance.

Market watchers estimate a compliance rate of about 90 percent so far. Saudi Arabia is the largest contributor to overall cuts and secondary sources reported total OPEC production at 32.1 million barrels per day at the end of January, a decline of 2.7 percent from December and below the target range.

Libya and Nigeria are exempt from the agreement as they depend on revenue from their energy sectors to help ensure national stability. Iran, meanwhile, is the only member state allowed to increase its production as it looks to regain a market share lost to nuclear-related sanctions.

Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that OPEC's goals through the duration of the six-month agreement depend in large part on how much production comes from members operating outside the deal.

"The OPEC cuts are not enough to reduce global crude supplies in the first half of the year compared to a year ago, they are just enough to maintain supply about unchanged versus last year," he said in the report.

By the estimates of his group, total global crude oil supplies would be slightly higher than last year during the first half of the year if OPEC's production levels through January hold through the duration of the agreement.

The terms of the agreement signed in November said the deal could be extended for another six months "to take into account prevailing market conditions and prospects."

Crude oil prices have moved in peaks and troughs in day-to-day trading, but kept within a narrow band around $55 per barrel for most of the year so far. U.S. shale oil, already more resilient than expected, should start to recover in early 2017 and potentially add to emerging supply-side concerns.

"We should however keep in mind that the global supply and demand balances are not for crude demand versus crude supply but for oil product demand versus crude oil supply," Jakob added.

Oil prices got a modest lift early Thursday on word OPEC may be upping the production cut ante, but gains were balanced by signs of Russian production growth.

A research note emailed from broker PVM suggests delegates at a May meeting of members of the Organization of Petroleum Exporting Countries may consider deeper cuts than already implemented under a six-month deal that began in January.

Libya and Nigeria are exempt from the deal and Iran has room for production growth as it seeks to regain a market share lost to sanctions. Saudi Arabia, the largest producer and de facto head of OPEC, has cut its output more than any other and total group production is already below the 32.5 million barrels per day target.

PVM finds the May meeting could lead to an extension of the deal for another six months, though market reactions were muted as the November provision mandating the cuts already included a clause on a six-month extension.

The price for Brent crude oil was up 0.6 percent from the previous close to $56.10 about a half hour before the start of trading in New York. West Texas Intermediate, the U.S. benchmark price for oil, gained 0.5 percent to $53.41 per barrel.

Crude oil prices came under heavy pressure last year as markets favored the supply side, leading OPEC to intervene in an effort to restore balance. Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that OPEC cuts so far aren't enough to reduce global supplies, "they are just enough to maintain supply about unchanged versus last year."

Elsewhere, PVM reports that Russian crude oil exports could increase by more than 5 percent this year even as it clings to its commitments to OPEC's managed decline agreement as a non-member participant. For other non-members, Norway, which is not party to the agreement, said job openings were on the rise in its oil and gas sector.

U.S. Federal Reserve Chair Janet Yellen this week painted a picture of general optimism, giving markets a boost. Markets, however, could be tempered further by reports from the U.S. Labor Department on first-time claims of unemployment.

Labor has been a lingering bright spot for the U.S. economy, though seasonally adjusted initial claims for the week ending Feb. 11 showed an increase of 5,000 from the previous week.

The less-volatile four-week moving average showed an increase of 500 and the previous week's average was revised upward in parallel.

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

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Previous Report
Oil-rich Alberta preps for wildfire season
Edmonton, Alberta (UPI) Feb 16, 2017
Just as its oil sector recovers from last year's breakout, the provincial government in Alberta issued an advisory for the pending start of wildfire season. Alberta declared March 1 as the official start of wildfire season. More than 235 square miles of land were scorched by wildfires last year. In the case of the Fort McMurray region, those fires prompted the largest residential evacua ... read more

Alberta backing bioenergy programs

A better way to farm algae

DuPont Industrial Biosciences to develop new high-efficiency biogas enzyme method

Cathay Pacific to cut emissions with switch to biofuel

Printable solar cells just got a little closer

Governors tell Trump that China will reap low-carbon rewards

First Solar Awarded 140Mw Module Supply Contract For Australia'S Largest Solar Project

Accelerated chlorophyll reaction in microdroplets to reveal secret of photosynthesis

Michigan meets renewable energy targets

British grid drawing power from new offshore wind farm

Prysmian UK to supply land cable connections for East Anglia ONE offshore wind farm

Russia's nuclear giant pushes into wind energy

'No risk' in Benin after truck with chemical for nuclear production crashes

Slovenian nuclear plant shuts down after water problem

Slovenian nuclear plant restarts after shutdown

Explosion at French nuclear plant, 'no radiation risk'

Gas hydrate breakdown unlikely to cause massive greenhouse gas release

Scientists argue current climate change models understate the problem

Researchers say climate models understate risk, ignore human factors

Cape Town pools crack down on splashing as drought bites

Four-stroke engine cycle produces hydrogen from methane and captures CO2

Roads are driving rapid evolutionary change in our environment

Tesla takes on Gulf gas guzzlers

Germany to expand infrastructure for electric vehicles

West Mosul eating once a day and bracing for worse

Baghdad suicide car bomb kills nine: official

Thousands pay homage to victims of Baghdad protest

Iraq hits IS commanders, Baghdadi fate unclear: statement

U.S. Air Force test-launches Minuteman III missile

N. Korea fires ballistic missile in challenge to Trump: Seoul

US, Japan conduct test of joint missile

Iran's Rouhani says military power 'purely defensive'

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

The content herein, unless otherwise known to be public domain, are Copyright 1995-2017 - 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. Privacy Statement