Oil Slips On Doubts Output Cut Will End Global Glut
Oil prices slipped on Wednesday on doubts that promised production cuts by OPEC and Russia would be deep enough to end a supply overhang that has weighed on the markets for more than two years.
North Sea Brent crude LCOc1 was down 30 cents a barrel at $53.63 by 0840 GMT. U.S. light crude CLc1 was down 35 cents at $50.58 a barrel.
Oil prices surged as much as 19 percent after the Organization of the Petroleum Exporting Countries and Russia announced last week that they would cut production next year in an effort to prop up markets.
“Oil markets are on track to tighten over 2017, which will be accelerated by OPEC’s decision to reduce production alongside non-OPEC countries,” said BMI Research. “If effectively implemented, we expect the global oil market will return to balance in Q1 2017.”
Oil production has been outpacing consumption by 1 to 2 million barrels per day since late 2014.
As a result of a more balanced market next year, BMI said that “the average annual oil price will be higher in 2017 than in 2016, with Brent at $55 per barrel for the year”. The average 2016 Brent price has so far been $44.47 per barrel.
“Oil markets are on track to tighten over 2017, which will be accelerated by OPEC’s decision to reduce production alongside non-OPEC countries,” said BMI Research. “If effectively implemented, we expect the global oil market will return to balance in Q1 2017.”
Oil production has been outpacing consumption by 1 to 2 million barrels per day since late 2014.
As a result of a more balanced market next year, BMI said that “the average annual oil price will be higher in 2017 than in 2016, with Brent at $55 per barrel for the year”. The average 2016 Brent price has so far been $44.47 per barrel
