{"id":30696,"date":"2017-05-26T06:15:15","date_gmt":"2017-05-26T06:15:15","guid":{"rendered":"http:\/\/www.biphoo.com\/bipnews\/?p=30696"},"modified":"2017-05-26T06:15:15","modified_gmt":"2017-05-26T06:15:15","slug":"oil-drops-opec-led-output-cut-extension-falls-expectations","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/oil-drops-opec-led-output-cut-extension-falls-expectations.html","title":{"rendered":"Oil drops after OPEC-led output cut extension falls below expectations"},"content":{"rendered":"

\n\tOil drops after OPEC-led output cut extension falls below expectations<\/span><\/span><\/strong><\/span>
\n<\/h2>\n

\n\tOil extended falls on Friday after tumbling in the previous session when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs.<\/span><\/span><\/span>\n<\/p>\n

\n\tAt Thursday's meeting in Vienna, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018. The initial agreement would have expired in June this year.<\/span><\/span><\/span>\n<\/p>\n

\n\tCrude oil plunged 5 percent following the announcement, and held its losses early on Friday.<\/span><\/span><\/span>\n<\/p>\n

\n\tBrent crude futures LCOc1 were at $51.26 per barrel at 0500 GMT, down 20 cents, or 0.4 percent, from their last close.<\/span><\/span><\/span>\n<\/p>\n

\n\tU.S. West Texas Intermediate (WTI) crude futures CLc1 were back below $50, at $48.61, down 29 cents, or 0.6 percent.<\/span><\/span><\/span>\n<\/p>\n

\n\t"With Russia and Saudi announcing nine months (of extended cuts) a week before, this was already priced in, so the market wanted the "over-and-above" which didn't come – hence the sell-off," said Virendra Chauhan, oil analyst at Energy Aspects in Singapore, referring to a statement by Saudi Arabia and Russia earlier in May that a none months extension to the cut was needed.<\/span><\/span><\/span>\n<\/p>\n

\n\tBritain's Barclays bank said the ongoing production cut would result in a drawdown of bloated fuel inventories, but added that OPEC's goal of bringing stocks down to their five-year average would not be reached within the timeframe of the production cut.<\/span><\/span><\/span>\n<\/p>\n

\n\tOther analysts, including at Goldman Sachs and Jefferies bank said a normalization of oil inventories could occur in early 2018.<\/span><\/span><\/span>\n<\/p>\n

\n\tAnalysts also said that the OPEC-led production cuts would support a further rise in U.S. output.<\/span><\/span><\/span>\n<\/p>\n

\n\tAnn-Louise Hittle, vice president at energy consultancy Wood Mackenzie said that the "decision in Vienna sends a signal of continued support for oil prices from OPEC which helps U.S. onshore drillers make plans" to further increase their production.<\/span><\/span><\/span>\n<\/p>\n

\n\tU.S. oil production C-OUT-T-EIA has already risen by 10 percent since mid-2016 to over 9.3 million bpd, close to the output of top producers Russia and Saudi Arabia.<\/span><\/span><\/span>\n<\/p>\n

\n\t"OPEC agreeing to nine months without deeper cuts leaves prices at the mercy of inventories and U.S. production and demand," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.<\/span><\/span><\/span>\n<\/p>\n

\n\tGoldman Sachs warned that the biggest risk to oil markets was what would happen next year, at the end of the OPEC-led production cut.<\/span><\/span><\/span>\n<\/p>\n

\n\tWith U.S. output rising steadily and OPEC and its allies potentially ramping up production in 2018 to regain lost market share, many traders are already expect another price slump.<\/span><\/span><\/span>\n<\/p>\n

\n\tSource:- http:\/\/www.reuters.com\/article\/us-global-oil-idUSKBN18M03X<\/span><\/span><\/span><\/p>\n

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