OPEC, NOPEC Ministers Recommend 9-Month Extension
The ministerial committee overseeing the implementation of the OPEC output reduction agreement recommended its extension on Wednesday, just one day before the bloc’s official summit in Vienna.
The agreement should be for another nine-month extension, the ministers said, giving it life until the end of 2018. An OPEC working panel concluded yesterday that the oil market would balance after June 2018, according to Reuters. “The best scenario would suggest third quarter for the rebalancing of the market,” an OPEC source told
Extending the pact until the end of next year is still considered to be the base scenario, and the oil market has largely priced in such decision. If OPEC falls short of this base expectation, oil prices could take a hit. On the other hand, rolling over the cuts until end-2018 could over-tighten the market and boost prices more, giving U.S. shale all the more reason to raise production.
Canada is boosting production as well, a move that threatens to undo progress made by the bloc’s agreement. Exxon Mobil inaugurated the Hebron field in Newfoundland this week, according to a report by Bloomberg. The field will produce 150,000 barrels of oil per day at its peak—filling a supertanker worth of oil every couple of weeks
The ministerial committee overseeing the implementation of the OPEC output reduction agreement recommended its extension on Wednesday, just one day before the bloc’s official summit in Vienna.
The agreement should be for another nine-month extension, the ministers said, giving it life until the end of 2018. An OPEC working panel concluded yesterday that the oil market would balance after June 2018, according to Reuters. “The best scenario would suggest third quarter for the rebalancing of the market,” an OPEC source told
Extending the pact until the end of next year is still considered to be the base scenario, and the oil market has largely priced in such decision. If OPEC falls short of this base expectation, oil prices could take a hit. On the other hand, rolling over the cuts until end-2018 could over-tighten the market and boost prices more, giving U.S. shale all the more reason to raise production.
Canada is boosting production as well, a move that threatens to undo progress made by the bloc’s agreement. Exxon Mobil inaugurated the Hebron field in Newfoundland this week, according to a report by Bloomberg. The field will produce 150,000 barrels of oil per day at its peak—filling a supertanker worth of oil every couple of weeks
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