Reuters Poll Shows OPEC Cut Extension Could End Glut by end of 2017

Supply and demand in the oil market could fall into balance by the end of this year if OPEC and its partners extend their deal to reduce crude output, a Reuters survey forecast on Friday.

  However, the prospect of rising output from outside OPEC, led by U.S. shale oil producers, could continue to hamper the rebalancing process, analysts said.

The Reuters survey of 35 economists and analysts forecast that Brent crude would average $57.04 a barrel in 2017, compared with last month’s forecast of $57.25 and an average so far this year of about $55.

“Growing oil production in the U.S. will remain a deterrent to further extensions to the output cap by OPEC and non-OPEC countries … (and) once again reinvigorate debate on defending market share among countries participating in the deal,” said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London.

The agreement between the Organization of the Petroleum Exporting Countries and some of its rival exporters, including Russia, to cut output by 1.8 million barrels per day (bpd) will expire at the end of June, though most analysts expect it to be extended to the end of the year.

OPEC compliance, as reported by OPEC and secondary sources, appears to be at high levels and is likely to remain so until OPEC’s next meeting in May, when strategy for the second half of the year will be decided, said Giorgos Beleris, analyst at Thomson Reuters’ Oil Research and Forecasts.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza