Trend The age of persistently volatile oil prices is unlikely to near its end with oil supply booming.
The global market could see oil price trading range around $50 for a couple more years, said Edward C. Chow , Senior Fellow for Energy and National Security Program at Center for Strategic and International Studies.
“The market is rebalancing with the OPEC/non-OPEC (mainly Russia) agreement to cut production, rise in demand, and consequent inventory draw-down, but this is happening slowly,” he said.
Oil prices were stable on expectations that Saudi Arabia and Russia would extend production cuts, although record U.S. exports and the return of supply from a Libyan oilfield dragged on the market.
Crude prices fell after a surprising jump in U.S. crude exports to a record 2 million barrels per day fanned worries about global oversupply. U.S. crude stockpiles fell sharply last week, but crude exports rose to 1.98 million bpd, the Energy Information Administration said.
Rising U.S. crude production has held down WTI prices, while Brent’s price has been heavily influenced by policy directions over output cuts led by the Organization of the Petroleum Exporting Countries.
Chow stressed that the run-up in price last week represented a change in market sentiment and reaction to political uncertainties around the world, but price has quickly dropped back down to the mid 50s.
“In order to get oil price to OPEC’s stated objective above $60, not only would the current production cut deal have to be extended beyond March, but further cuts would have to be contemplated,” he said , adding that higher prices will stimulate more non-OPEC production, especially from the United States, and slower demand growth worldwide.
In late 2016, OPEC and 11 non-OPEC countries, including Azerbaijan, agreed to curtail oil output jointly by 558,000 barrels per day. The agreement was signed for the first half of 2017 and on May 25, 2017, it was extended by late 1Q2018.
In August 2017, OPEC and participating non-OPEC producing countries recorded the highest conformity ever with their voluntary adjustments in production, achieving a level of 116 percent.
The next JMMC meeting is scheduled for the day prior to the full ministerial meeting on November 30 in Vienna.
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