Lukoil and PetroChina Board of Directors Member Richard Matzke claims that the price of oil will reach as much as $60 dollars per barrel by the end of June and will be as high as $65 dollars per barrel by the end of the year if stakeholders continue implementing the output reduction deal.
The price of oil will reach as much as $60 dollars per barrel by the end of June and will be as high as $65 dollars per barrel by the end of the year if stakeholders continue implementing the output reduction deal, Lukoil and PetroChina Board of Directors Member Richard Matzke told Sputnik.
“I believe when the present dust settles we will have a $58-60 price by June 31 and $62-65 by December 31,” Matzke said.
The former Chevron vice chairman noted that his position is based on keeping his “ears open” rather than “massive detailed research.”
In November 2016, OPEC member states reached an agreement to cut oil production by 1.2 million barrels per day for the first half of 2017 to support global oil prices.
The accord was supported by 11 non-OPEC states, including Russia, which had joined the deal by promising to reduce oil output by 558,000 barrels per day.
The deal caused the price of crude oil to climb to $55-56 per barrel, boosting optimism in the energy market.
The agreement was reached for a six-month period with a possibility to extend it.
All it took for OPEC to panic, was the sharpest drop in oil prices since last summer, sending WTI not only back under $50, but also wiping out all gains since the November Vienna “supply cut” deal.
With the cartel suddenly finding itself in unfamiliar territory, where neither the daily barrage of “flashing red headlines” sparks a headline-scanning algo buying frenzy, nor the alleged production cuts leading to a reduction in inventory (quite the contrary, US commercial stocks just hit a new all time high) OPEC had no choice but to make a threat to its biggest competitor: US shale companies.
According to Reuters, Saudi energy officials told top independent U.S. oil firms in a closed-door meeting this week that they should not assume OPEC would extend output curbs to offset rising production from U.S. shale fields. The reason for Saudi ire is simple: it is producing less, having shouldered the bulk of OPEC cuts, and yet with prices once again declining, and US shale producers ramping up production, not only are Saudis pocketing less revenue, but they are also are permanently giving up market share to US producers whose production in recent months has soared, especially in the Permian, where breakeven costs are as low as $30 for some producers.
The official data (from the US Energy Information Administration) is out Wednesday morning, US time.
- The agreement expires in June
- But may be extended
- Meetings again in May to discuss extending the cuts
Prices reacted instantly by puking lower in both WTI and RBOB but the RBOB draw saw prices reverse…
Iraq talks OPEC cuts
- Iraq ready to cut in the second half if OPEC decides to extend policy
- OPEC will likely need to extend cuts
- Iraq ‘somewhat’ satisfied with oil price, hopes for improvement
A second OPEC cut will put a squeeze on a few producers. Much of the Saudi cut, for instance, was window dressing because a seasonal slowdown was imminent.
Eleven non-OPEC countries, including Russia, Mexico and Kazakhstan, later joined the deal, pledging to reduce production by a total of 558,000 barrels per day on a voluntary basis.
“This historic OPEC/non-OPEC agreement is very much on the mindset of everybody,” Yergin said. “It has been more successful than many would have thought.”
He continued that at the conference the stakeholders “are going to be looking ahead to May and June and say what’s going to come after, and then to what degree is the market rebalancing. I think that will be a great question that everybody will to try to assess.”
Qatari Energy Minister Mohammed Saleh Sada said in February that the level of OPEC states’ adherence to the agreement is unprecedentedly high, and while they aim for it to reach 100 percent, it now stands at 94 percent.
CERAWeek 2017 starts today
- Its an annual international gathering of energy industry people
- Being held in Houston, Texas
- The first day’s events will include a speech from Russian Minister of Energy Alexander Novak