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OPEC will try to talk prices down if oil tops USD 70 - Goldman

Gasoil News - Published on Fri, 12 Jan 2018

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Bloomberg reported that OPEC would try to talk down an oil rally above $70 a barrel to cushion the impact on the global economy and rival supplies, according to Goldman Sachs Group Inc. Oil has climbed to a three-year high above USD 69 in London amid OPEC production cuts, growing demand and political risks to supply. If prices keep rising, OPEC could see some unwelcome developments, such as greater investment by competitors including US shale drillers, or central bank interventions to temper inflation.

Jeff Currie, the bank’s head of commodities research, said in a Bloomberg television interview from Frankfurt, said that “OPEC members do not want to see that. We’ll see more noise and rhetoric if prices trade above $70 a barrel in coming days to push this market back down.”

The Organization of Petroleum Exporting Countries formed an alliance with Russia in late 2016, cutting their output to end a glut that has weighed on prices and battered their economies. The coalition has agreed to press on with the curbs until the end of the year to eliminate the remains of the oil surplus.

Yet there are signs the cartel is growing uncomfortable with the consequences of higher prices. Iranian Oil Minister Bijan Namdar Zanganeh said Tuesday that OPEC didn’t want oil above $60 because it might provoke too much US shale growth. Fellow members such as Iraq and Nigeria have made similar warnings.

The US Energy Information Administration said that America may challenge both Saudi Arabia and Russia as the world’s top crude producer, with its output headed for 11 million barrels a day in late 2019.

Further price gains would bring more money to the sector, closing the “window of opportunity” that OPEC has enjoyed while U.S. explorers have had limited access to new capital following disappointing results, Currie said.

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Posted By : Nanda Koijam on Fri, 12 Jan 2018
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