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Oil prices to go down despite OPEC decision

Oil&Gas Materials 8 December 2017 13:06 (UTC +04:00)

Baku, Azerbaijan, Dec.8

By Leman Zeynalova – Trend:

World oil prices will fall despite the decision of OPEC and some non-OPEC countries to extend the crude output cut deal, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.

The expert doesn’t believe that the extension of the deal will have an upward effect on the oil prices, because the market expected this extension.

“At IHS Markit we expect prices to weaken, back just below $60 per barrel, because of increasing US production, and easing demand for oil through the northern hemisphere winter,” he added.

As for the OPEC decision itself, Welch noted that the extension to the end of 2018 was not a surprise, but it is the subtleties of the deal which are really interesting.

“For example, the deal gives the opportunity to review mid-2018 and end the deal if it is concluded the market is balanced and stocks are back down – Russia wanted this,” said the expert.

Also it seems to have been agreed at what point Nigeria and Libya will become part of the deal – if their combined production exceeds 1.8 million barrels per day, but still not clear exactly how this would work in practice, Welch believes.

Earlier, OPEC announced that it, along with Russia and several other non-OPEC producers, had reached an agreement to extend its production deal for a further nine months. This would shift the expiration date of the agreement from March to the end of 2018. The agreement is on the same terms as those agreed in November last year.

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Follow the author on Twitter: @Lyaman_Zeyn

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