OPEC sees ‘extraordinary’ steps needed for market stability in 2018

Bloomberg

Oil producers are succeeding in re-balancing an oversupplied market, though they may need to take further steps to sustain the recovery into 2018, OPEC Secretary-General Mohammad Barkindo said.
Saudi Arabia and Russia are currently leading consultations between the Organization of Petroleum Exporting Countries (OPEC) and other major suppliers about the future of their agreement to cut oil output, Barkindo said in New Delhi. The pact expires in March, and oil producers are debating whether to extend it later into the year.
“There is a growing consensus that, number one, the re-balancing process is underway,” he said after meeting with Indian Oil Minister Dharmendra Pradhan. “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward.”
Barkindo didn’t elaborate on what those additional measures could be and if they would include the main proposal currently on the table — an extension of the existing cuts by up to nine months — or something else. Venezuela has suggested making deeper cuts, but that’s considered unlikely given the political challenges of getting all members to agree unanimously.
OPEC and allied producers agreed in December to pare output to clear a glut and bolster oil prices. The cuts have helped revive crude, which had fallen to half its 2014 peak. Russian President Vladimir Putin last week said the country is open to extending the cut deal to the end of 2018. OPEC plans to meet on Nov. 30 to assess the
market and its production policy.
Brent crude, the benchmark for more than half of the world’s oil, was little changed at $55.32 a barrel in London. Prices fell 3.3 percent last week, the steepest weekly drop since June, and are down about 2 percent this year.
The 24 producers that agreed to pump less oil are looking forward to welcoming additional participants in the accord, Barkindo said, without identifying any possible newcomers. “At the moment, there is no talk of an extraordinary meeting” beyond the session scheduled for next month in Vienna, he said.
UAE Energy Minister Suhail Al Mazrouei said he’s optimistic that the next OPEC meeting will lead to a consensus between the group and its non-OPEC partners that will help balance the market in 2018, according to a tweet. The production cuts have led to a decline in crude inventories and a better
balance in the oil market, he said.

Oil trades near $50
Bloomberg

Oil traded near $50 a barrel as OPEC hinted “extraordinary” measures may be adopted to
restore market stability. Futures rose 0.2 percent in New York after losing 3 percent on Friday.
Oil on Friday capped the steepest weekly decline since May on speculation rising global output may offset supply cuts led by members of the Organization of Petroleum Exporting Countries.
“The market thinks there’s a chance of deepening the cuts, not only extending” them, Tamas Varga, an analyst at PVM Oil Associates Ltd., said by phone. “Some actions must follow these words, otherwise the market will become disillusioned very very quickly.”
West Texas Intermediate for November delivery was at $49.38 a barrel on the New York Mercantile Exchange, up 9 cents, in London. Total volume traded was about 24 percent below the 100-day average. Prices slid $1.50 to $49.29 on Friday, capping a 4.6 percent drop for the week in their first weekly loss since early September.
Brent for December settlement fell 28 cents to $55.34 a barrel on the London-based ICE Futures Europe exchange. Prices declined 3.3 percent last week. The global benchmark traded at a premium of $5.78 to December WTI.
An estimated 1.62 million barrels a day, or 93 percent of oil production in the Gulf of Mexico was halted Sunday, according to the Bureau of Safety and Environmental Enforcement. Magellan Midstream Partners LP resumed normal operations at the Marrero and Gibson oil terminals in Louisiana, and Enbridge Inc. returned workers to platforms on Sunday.
Nate follows hurricanes Harvey and Irma, which rattled energy markets last month after shutting refineries and pipelines. A decline in the number of rigs drilling for oil resumed in the U.S. last week, according to Baker Hughes.