OPEC, Russia probably have to maintain cuts well into 2019 - Saxo Bank

Baku, Azerbaijan, Feb.27

Trend:

The high level of compliance in maintaining production cuts witnessed by OPEC and Russia since last January have been the main drivers behind the strong recovery in the price of oil, Saxo Bank’s analyst and Head of Commodity Strategy Ole Hansen said in an interview with Azernews.

Commenting on the decision of Saudi Arabia to cut production, he noted that monthly changes like the one announced by this country is of a technical character and should have limited impact on oil prices.

Hansen stressed that OPEC and Russia probably have to maintain the cuts well into 2019 with the IEA expecting non-OPEC supply growth being enough to meet the rise in global demand until 2020.

“I don’t think OPEC can or should do more at this stage where the risk is more of the market overshooting to the upside. Also quality matters, and most of the production growth currently seen in U.S. shale is of a quality so light that refineries struggle to use it,” he said.

In our outlook for the first quarter, we highlighted the risk that the oil market would potentially experience a correction because an oil price above 70$, in our belief, was unsustainable at this stage in the global oil market, according to the Saxo Bank’s expert.

“We did see the sell-off during January and early February. Looking back, we can see most of the correction was triggered and driven by risk adversity caused by the weaker stocks and rising bond yields. Not least due to the need for traders to reduce what had become a record and eventually unsustainable bet on rising prices. However, at this stage, the longer term bullish sentiment has been maintained with the recent 10 percent correction from a technical perspective being no more than a weak correction within the existing uptrend,” he added speaking of prices.

This was highlighted by speculators response to the said 10 percent correction, according to Hansen.

“During the week of heavy selling to February 13, the net-long was only reduced by 5% with no fresh short selling hitting the market. So, it does indicate the market is maintaining a bullish outlook. The problem with that is if we see continued weakness in stock markets, or if we see additional rapid increase in non-OPEC supply, we could see the market come under further pressure. But for now, if we look at Brent crude we’re settling into a 61-70 range. In my belief, 61 is very key because it’s 38.2% retracement of the rally we had all the way from June up to January, and if you look at WTI the similar level there is 58. So, at this stage, I believe we’re settling into a range, but these are the two key levels to look out for to the downside,” he said.

In my opinion, the risk is a bit skewed to the downside, in the short term, because of the elevated position that we still have, the expert noted.

“But also the fact that we have entered into the time of year when inventories in U.S. and elsewhere tend to rise while U.S. production growth remains firm. So as long as that is maintained, that could potentially have a negative impact on oil prices,” he said.

Overall, the market is fundamentally in a much better place than it was this time last year, it also means that there are buyers lurking in the wings, should the need to reduce exposure further take the price lower below the mentioned levels of support, according to the expert.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

OPEC and its partners decided to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

World oil prices are restrainedly rising on Monday, February 26, after two weeks of consecutive growth on the background of weakening fears of overproduction in the U.S. and another failure of supplies from Libya.

Price growth was also supported by comments from Saudi Arabia that it would continue to curb exports in line with the OPEC-led effort to cut global supplies.

On London ICE (Intercontinental Exchange Futures) cost of the Brent crude oil increased $0.18 to stand at $67.49. The price of the US Light crude oil at the NYMEX (New York Mercantile Exchange) rose $0.28 to trade at $63.83.

US energy companies last week added one oil rig, the fifth weekly increase in a row, bringing the total count up to 799, the highest level since April 2015, Baker Hughes energy services firm said on Friday.

Hedge funds and money managers upped their bullish wagers on U.S. crude oil for the first time in four weeks, data showed on Friday.

A powerful 7.5-magnitude earthquake struck Papua New Guinea’s Southern Highlands province early on Monday, disrupting communications and oil and gas operations.

Meanwhile, Libya’s National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield after a protest by guards closed the field.

Subscribe to Trend in Google News! Subscribe
WHO donates 260k packs of intravenous solutions to Iran
WHO donates 260k packs of intravenous solutions to Iran
Azerbaijan-Iran plan to build new bridge to increase traffic
Azerbaijan-Iran plan to build new bridge to increase traffic
Iran Securities and Exchange Organization focusing on strengthening Capital Market Stabilization Fund
Iran Securities and Exchange Organization focusing on strengthening Capital Market Stabilization Fund
Loading Bars
Latest
WHO donates 260k packs of intravenous solutions to Iran
Cost of cargo transported via trains up in Azerbaijan
International Court of Justice grants Azerbaijan's request for temporary measures against Armenia
Western media shows neutral approach to Azerbaijan’s Zangazur corridor - Head of Trend News Agency’s Foreign Projects Directorate
Azerbaijan donates 100,000 doses of Sinovac vaccine against COVID-19 to Burkina Faso (PHOTO)
Information spread in Armenian media about killing of illegal militant on territory of Azerbaijan is baseless – MoD
Azerbaijani MFA comments on statement of Armenian foreign ministry
International Court of Justice urges Armenia to take urgent measures against groups and individuals making violent calls on ethnic grounds
International Court of Justice refused to secure Armenia's claim for immediate return of so-called POWs
Azerbaijan completes over half of construction of Barda-Aghdam highway
Azerbaijan building new high-speed road in Shusha city
Azerbaijan-Iran plan to build new bridge to increase traffic
Iran Securities and Exchange Organization focusing on strengthening Capital Market Stabilization Fund
Iran looks to expand agricultural ties with Romania
EIB, EBRD touch on Georgia’s economic growth
Price indexes of industrial, trade sectors at Uzbek stock exchange fall
Georgia shortens terms of COVID-19 booster vaccination
Azerbaijan shares data on 10M2021 oil exports to Vietnam
Uzbekistan shares stats on export of textile products for 10M2021
Kazakhstan's KMG talks project of new gas processing plant in Mangistau
Iran's Bahar Azadi gold coin price increases
Azerbaijan sees decrease in import of vehicles, spare parts over 10M2021
Volume of loaded/unloaded cargo in Iran’s Qeshm port up
Value of Azerbaijan's export to Turkmenistan up for 10M2021
Azerbaijan’s energy ministry opens tender to buy technical support services
Azerbaijan-Iran to take steps to increase trade turnover – Iranian ambassador
Shootout occurs on border between Azerbaijan and Iran - offender neutralized
Baku Int'l Sea Trade Port reveals details of dev’t strategy until 2035
First harvest gathered in mushroom greenhouse in Turkmenistan’s Mary region
Azerbaijan-Iran implementing agreements on joint cooperation – ambassador
Germany's next finance minister stresses price stability
SOFAZ shares estimates of budget revenues for 2022
Iran opens office for cargo barter with Pakistan
Number of legal entities restoring activity in Azerbaijan slightly increases in 11M2021
President Ilham Aliyev receives President for Exploration and Production of TotalEnergies (VIDEO)
Indian embassy in Baku holds webinar on electronic and computer hardware/software products (PHOTO)
Sport in Azerbaijan - integral part of state policy, deputy minister says
Bank of Israel bought $4 bln of FX in Nov, hits $34 bln in 2021
India's Rajnath Singh attends maiden 2+2 Dialogue with Russia
Less urgent need to rebuild stocks to weigh on coal demand
Omicron poses a major risk to global oil demand
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,530 more COVID-19 cases, 1,864 recoveries
Azerbaijan, Russia’s Astrakhan sign action program to develop co-op (PHOTO)
Georgia shares data on cigarettes turnover in 10M2021
President Ilham Aliyev signs order appointing new chairman of State Insurance Commerce Company
Georgia’s imports of fuel and lubricants from Kazakhstan plummet
EU health bodies recommend mix-and-match of COVID-19 vaccines
Georgian apple exports on rise
Number of taxpayers increases in Azerbaijan over 11M2021
Kazakhstan increases volume of production of crude oil and oil products
Kazakhstan shares data on coal production
Turkmenistan becomes top oil exporter to Georgia
Armenia should fulfill requirements of documents signed after Second Karabakh War – Turkish official
Google Pay begins operating in Israel
Volume of electricity production in Uzbekistan for 10M2021 unveiled
Azerbaijan records growth in cost of air cargo transport for 10M2021
Iran reveals COVID-19 data for December 7
Central Bank of Azerbaijan reveals amount of foreign currency sold via auction
Non-oil exports in Azerbaijan to reach record high – minister
Opening of Azerbaijan’s Zangazur corridor may reduce transportation time from China to Europe
Azerbaijan to auction several mineral deposits
Epsilon obtains industrial gas inflow from new well at field in Uzbekistan
bp to develop best barrels, make portfolio higher value, says CEO
Azerbaijani State Tourism Agency talks about prices for air tickets (Exclusive)
Iran’s IMPASCO aims to transfer shares of some mining complexes to private sector
bp going to invest 10 times more in low carbon by 2030 - Bernard Looney
What does gas swap deal between Azerbaijan, Turkmenistan and Iran promise?
Baku Stock Exchange talks priorities in trade turnover until 2023
Turkey, Iran trade turnover grows in October 2021
Georgia shares top importers of its hazelnuts
bp achieves increase in productivity in Azerbaijan with new agile organizational structure
Russia’s new daily coronavirus cases below 32,000 for first time since October 14
Iran pins big hopes on gas swap contract, aims for European exports in near future, says ambassador (Exclusive)
Turkmen agriculture ministry opens tender for purchase of veterinary vaccines
Iran eyes increase in flights via Rasht International Airport
Kazakh oilfield construction company opens tender to buy pipes
Kazakhstan eyes diversifying trade flows with ECO countries
Azerbaijan’s Baku Int’l Sea Trade Port expects increase in flow of goods
Georgia’s spice exports to Central Asia down
Uzbekistan reveals volume of exports and imports for 10M2021
Volume of foreign trade turnover increases in Uzbekistan
Kazakhstan sees multifold decrease in trade with South Korea
Eurostat discloses Azerbaijan’s petroleum exports to Italy
Bank of Georgia to begin offering preferential agro-credit
Georgia’s export of spices remains steady - Geostat
Azerbaijan’s oil exports to Romania for 10M2021revealed
Baku port reveals cargo shipment capability of Ro-Ro terminal
Azerbaijan shares forecast on total cargo shipment via Baku int'l trade port for 2021 (PHOTO)
Kazakh Ulba Metallurgical Plant opens tender for cargo transportation services
Azerbaijan may potentially develop transit communications with int’l transport corridors - Russian analyst
Iran continues work on Chabahar – Zahedan railway project
Eurostat reveals Spain’s petroleum oils import from Azerbaijan
Azerbaijan talks impact of border restrictions on tourism due to COVID-19
Germany’s petroleum oil imports from Azerbaijan disclosed
Iran Metafo exhibition showcasing country's steel, mining industries
Azerbaijan discloses oil exports to Indonesia for 10M2021
NATO’s Mobile Training Team conducts courses - Azerbaijani MoD (PHOTO)
Iran’s SPGC launches final turbo compressor in 12th refinery at South Pars gas field
UAE announces move to Saturday-Sunday weekend
All news