Oil prices on a rollercoaster - expert
By Trend
Absent a major supply disruption we are likely to see the same pattern in oil prices for a while, Frank Verrastro, expert in energy issues, Senior Vice President and Trustee-fellow at the Center for Strategic and International Studies (CSIS), told Trend.
Compliance with 2016 deal is a nagging issue, which OPEC continues to address with varied success, while impact on prices remains of more important, according to the expert.
“OPEC is counting on stabilized/reduced production and increased demand in second half of 2017 to draw down global stocks and accelerate the market rebalance,” he said.
Demand has been uneven and the supply – resilient, in the US and other places, so the overhang (while diminishing) stubbornly remains, Verrastro noted.
“Market’s ‘sentiment’ has been both bearish and bullish at times, and this, in combination with the perception of the fundamentals – supply, demand, stock levels, etc., had kept prices on a bit of a rollercoaster, but in a lower price band,” he added.
The expert believes that, absent a major supply disruption, (e.g., the loss or substantial reduction in Venezuelan supply), “we are likely to see this pattern continue for a while.”
He also recalled that the July output, by any measure, was up to 32.8 million barrels per day and well above the 32.5 mmbd target.
In late 2016 OPEC agreed to slash the output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 barrels per day. Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce the aggregate output by 558,000 barrels per day. The agreement was for six months period, extendable for another six months.
In May, all the participants of last year's agreement agreed to extend it for another nine months.
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