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Shale growth may force OPEC into another production cut in April - Citi

Gasoil News - Published on Mon, 17 Dec 2018

Image Source: azernews.az
Ed Morse, Citi’s global head of commodities research, told CNBC, describing last weekend’s OPEC and non-OPEC agreement led by Saudi Arabia and Russia to cut crude output by 1.2 million barrels per day (bpd) by January, “I think they went far enough for the time being. They’re going to have to re-address this issue sometime next year, but I’m glad they’re meeting for their sake in April, and it may be by April they’re going to have to confront another cut.” When asked about the size of this potential cut, Morse stopped short of making a call, instead pointing to the bigger picture: booming production volumes from the US threatening OPEC’s power to shape the oil market.

Morse said, referring to Russia, Saudi Arabia and the US, the world’s top three oil producers, said “I like to call it the struggle of the bear, the camel and the eagle. Saudi Arabia discovered that OPEC doesn’t have the clout it used to have.”

The 15-member cartel has a current output of roughly 35 million bpd. That’s just over its late 1970s level of around 30 million bpd, when global oil demand was in the 60 million bpd range, according to the Energy Information Administration (EIA). Global demand is now in the 100 million bpd range.

Morse said that “So by definition, they lost market clout.” The recent departure announcement by Qatar, scheduled for January 1, has added further questions as to the future of the group.

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Posted By : Nanda Koijam on Mon, 17 Dec 2018
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