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Oil Prices Fall As OPEC Plans To End Cuts

Tuesday February 27, 2018

Oil prices gained a bit over the past few trading days, after a surprise drawdown in crude stocks last week. But analysts see that to be a one-off, with expectations that inventories will resume climbing this week.

IEA: U.S. to become world’s largest oil producer by next year. The IEA’s executive director said that the U.S. will surpass Russia to become the world’s largest oil producer “definitely next year,” if not in 2018. “U.S. shale growth is very strong, the pace is very strong … The United States will become the No.1 oil producer sometime very soon,”

OPEC hopes to ease production cuts in 2019. Saudi oil minister Khalid al-Falih said that he hopes that OPEC can relax the production limits next year, while putting in place a more permanent framework for cooperation between OPEC and the non-OPEC countries that are participating in the deal. “A study is taking place and once we know exactly what balancing the market will entail we will announce what is the next step. The next step may be easing of the production constraints,”  My estimation is that it will happen sometime in 2019. But we don’t know when and we don’t know how. He went on to add that a longstanding cooperative agreement is a priority. “What we want is an evergreen framework that brings producers from OPEC and non-OPEC (countries) together in a market monitoring fashion that allows us to take quick decisions,” he said.

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