JP Morgan: OPEC to cut output by 3% in 2017 if reaches deal
Baku, Azerbaijan, Nov.25
By Leman Zeynalova – Trend:
OPEC accord on November 30 is expected to cut the oil output (except Libya, Iran and Nigeria) by 3 percent in 2017, according to the report of the US JP Morgan bank.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC on Nov.30 in Vienna.
If the US oil output rises to 9.2 million barrels per day from 8.7 million barrels per day in response to higher prices, global supply would only increase by below-average 500,000 barrels per day, said the report obtained by Trend.
The analysts believe that Donald Trump’s election as the US president doesn’t impact supply outlook materially even if the country’s administration opens additional federal lands to drilling.
As for the oil prices, JP Morgan said that after two years of falling average oil prices, enough could be changing on the supply front to generate a higher range in 2017 around $55 per barrel.
“Two years of price declines have promoted notable rebalancing, which is obvious on several indicators. US crude output has fallen by about 1 million barrels per day from its mid-2015 peak of 9.6 million barrels per day to the current 8.6mbd. Market share has shifted from the US (plus Venezuela, Libya and China), back towards Gulf states,” said the report.
One rebalancing that hasn’t occurred, however, is fiscal: the fiscal breakeven oil price – that which eliminates producer countries' budget deficits – remains more than $50 per barrel for most countries, according to JP Morgan.