Crude below $50 as OPEC disappoints with 'safe bet' extension
06 Juin, 2017, 10:12 | Author: Marc Bacque
Yesterday, brent crude oil fell more than 1pc to around $53 per barrel as markets were disappointed Opec would not deepen the cuts or extend them by as long as 12 months.
"It seems highly likely, although we can never be certain until the decision is made, that we're going to roll over with the same terms over a nine-month period", said Khalid al-Falih, the Saudi energy minister, at a meeting of Opec and 11 non-member countries on Thursday. With prices likely to fall because of an oversupply in the market if they don't, both Russian Federation, and OPECoil giant Saudi Arabia have spoken out in favor of an extension ahead of Thursday's meeting.
"Russia has an upcoming election and Saudis have the Aramco share listing next year so they will indeed do whatever it takes to support oil prices", Gary Ross, head of oil company PIRA Energy, told reporters about the underlying reasons for OPEC's move. West Texas Intermediate crude oil, the United States benchmark of prices, rallied about 17% from its year-to-date trough at the beginning of May through Wednesday.
OPEC and other oil-producing nations have extended their output cuts for an additional nine months in an effort to shore up prices.
Among the scenarios being considered by the panel are a six or nine-month extension with a possible deeper cut, reports said.
Production curbs have helped prices soar above $50 a barrel this year.
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Turkish officials have offered to mediate, which is promising given their good relations with both Qatar and other Gulf countries. Al-Jazeera news agency, which is based in Doha , Qatar's capital, was forced to shut down its office in Saudi Arabia on Monday.
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"Having analyzed the results of the Vienna agreement, it was noted [at today's meeting] that the agreement had a positive impact on the market by stabilizing the oil prices at a range from $50 to $55 per barrel", he said. Global crude oil inventories are above their five-year average or above 3 billion barrels.
Hopes are running high ahead of Thursday's OPEC meeting that members will agree to further cuts to output in a bid to maintain price stability.
That doesn't mean, though, that the countries won't extend the cuts in March 2018 but it will be decided "closer to the date", the minister explained.
"We support the extension of production cuts agreement that was agreed upon past year for another six months", Mohammed Al Rumhy, Minister of Oil and Gas said.
The OPEC cuts have enabled USA drillers to export more, especially to Asia. OPEC hadn't yet announced the production levels for the agreement on Thursday.
Opec's current deal, agreed at the end of 2016, covers only the first half of 2017.
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At that Saudi conference, Trump met with Qatar's ruling emir. "We have no further comments for the time being", it added. Despite Doha's official denial, media outlets in several Gulf countries reported the emir's comments as fact.
Khan took to Twitter with his message of reassurance as well: "We are all shocked and angry today - but this is our city". Mr Trump accused Mr Khan of downplaying the attack by telling Londoners there was "no reason to be alarmed".
A change in leadership could raise questions about the future of the US base and potentially deprive Hamas of its main benefactor. About 80 percent of Qatar's food requirements are sourced via bigger Gulf Arab neighbours, such as the UAE and Saudi Arabia.
After the breakup of diplomatic missions of these States in Qatar will be closed, stops the sea and air links with the Emirate. In March 2014, Saudi Arabia, the United Arab Emirates and Bahrain recalled their ambassadors from Qatar over that rift.
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