Crude Oil, Brent oil, OPEC, NON OPEC, OIL SUPPLY, USA,RUSSIA

Output Cuts prolonged; Oil price falls

OPEC made a decision today. It agreed to extend oil output cuts untill March 2018.

OPEC’s cuts have led the oil prices back over $50 a barrel. Giving a fiscal stimulus to producers. To those countries who rely on energy revenues. And who have had to burn through foreign-currency reserves to cap holes in their budgets.

The market was expecting the prolonged Oil output cuts. They started from output levels in October 2016, and will now last till March of 2018.

By 10:30 a.m. ET, Brent crude was 0.7 percent down. It was trading at around $53.50 per barrel. With it having chopped earlier losses for OPEC having said it would not deepen the cuts. Nor extend them by 12 months.

The first output cuts were officially brought up in December 2016. They were led by member Saudi Arabia and non-member Russia. It was the first cut in 15 years, aiming to rebalance Oil market. They decided to cut 1.8 million bpd from the market in the first half of 2017.

Essam al-Marzouq said  that today, OPEC decided to keep its own cuts of around 1.2 million bpd. Cuts will last nine months.

”Despite the output cut, OPEC kept exports fairly stable in the first half of 2017 as its members sold oil from stocks.” (Reuters)

“There have been some suggestions for the deeper cuts. And many member countries have indicated flexibility but … that won’t be necessary.”

By the words of Khalid Al-Falih, the deeper and longer cuts are not necessary for now.

 

Nigeria and Libya position

 

The third of world’s oil production comes from OPEC countries. The new reduction of 1.2 bpd was made based on October 2016 output of around 31 million bpd. This cuts exclude Libya and Nigeria.

Nigeria and Libya would be excluded from current output cuts, said Falih.

Also, he explained that Saudi oil exports will decline considerably from June. This way helping to speed up market rebalancing.

Today’s meeting has shown that medium-term cooperation with non-OPEC producers is very important in order to achieve the market rebalance.

“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)

 

OPEC aims

OPEC has a self-imposed aim. It is to bring the stocks down, from a record high of 3 billion barrels. OPEC aims to lead them to their five-year average of 2.7 billion.

“We have seen a substantial drawdown in inventories that will be accelerated. Then, the fourth quarter will get us to where we want.” (Khalid Al-Falih)

The main reason why OPEC also faces the dilemma of not pushing oil prices too high.. Is because that could lead to U.S. further drilling way higher. And it would seriously rival Saudi Arabia and Russia as the world’s biggest producers.

“Less OPEC oil on the market enhances the opportunity for American energy to fill needs around the world, and will help us achieve energy dominance.” (Ryan Sitton said)

In order to achieve the fast & healthy market rebalance, OPEC countries must build the good relation with non-member countries. And by that build a global Oil zone in which the participants carefully pull their further steps.

 

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Final foresight before OPEC’s official meeting on May 25th

OPEC and its non-OPEC allies oil producers, today in Vienna went closer to agreeing on prolonged output cuts.

The OPEC will tomorrow definitely decide on whether to prolong the accord reached in December.

Market participants expect an extension by nine months. Supported by the scenario in which OPEC’s main member Saudi Arabia and top non-member Russia agreed this month they would support such a move.

Kuwait on Wednesday gave a signal that OPEC could possibly discuss deepening the cuts.

Countries including  Algeria, Kuwait, Venezuela, current OPEC president Saudi Arabia and non-OPEC producers Russia and Oman advised keeping the cuts “at the same level”.

The Ministerial committee said in a statement it had recommended extending the cuts by nine months to March 2018.

 

Energy Ministers

When asked about the period in which the cuts are going to extend, Saudi Energy Minister Khalid al-Falih confirmed it will be a nine-month extension.

“Before the end of the year, prices may go above $55 a barrel.” (Noureddine Boutarfa)

The further extension by 9 months will help rebalance the market faster.  This is a fact on which Saudi Arabia and Russia agreed. It would be more beneficial than the previous 6 months agreed. This will prevent crude prices gaining levels below $50 per barrel.

“OPEC has already achieved a lot. They stopped the oil market surplus from building even before they started cutting.” said Gary Ross (for Reuters)

The majority of OPEC ministers including Iraq’s have already voiced support for extending cuts by nine months.

Bijan Zanganeh, Iranian Oil Minister who was pretty conflicting with Saudi Arabia in most previous OPEC meetings, now said extensions of six or nine months were possible. Zanganeh is due to arrive in Vienna today.

 

Deeper Cuts

Current OPEC’s cuts are helping the oil prices to stay at levels above $50 a barrel. It is giving a fiscal support to producers. Among producers there are many countries which heavily rely on their energy revenues. And that is their way to tap holes in their budgets.

Observing the 2014, and its Oil price decline..It led to Russia and Saudi Arabia’s agreement to force the lower production in some countries, in order to keep the kind of a balance in the market. These also led to the unrest in countries such as Nigeria and Venezuela. And impacted the everyday life of people in these countries.

A substantial deeper cut was unlikely “unless Saudi Arabia initiates it with the biggest contribution and is supported by other Gulf members”.

By 13:40 GMT on Wednesday, Brent crude was trading loosely flat just above $54 a barrel.

 

OPEC goals

”OPEC has a self-imposed aim to bring the stocks down from a record high of 3 billion barrels. And lead them to their five-year average of 2.7 billion.” (Reuters)

Boutarfa explained that he believes stocks remained stubbornly large in 1H17 because of high exports from the Middle East to the United States.

“Thankfully, things are improving and we started seeing a draw in inventories in the United States.” Boutarfa said

”I believe that inventories should decline to their five-year average by the end of 2017.”

Some sources said the OPEC association could also send a message about tighter exports.  However it was not so clear how would they present that on Thursday.

Tomorrow is the day when Final decisions are taking place in Vienna. It will have huge impact on market movements, and it will also strongly affect the Oil market rebalance in medium-term.

 

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Oil prices rise, as OPEC’s decision is getting closer

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Tuesday’s Oil prices were a bit volatile, but now Oil rose again on expectations of OPEC’s output cuts extension. As Thursday is nearing, the OPEC meeting is giving a support to global oil prices. There were some losses earlier today in the session. After White House said it would sell off half of the country’s oil stockpile. But as it turned out, this intentions were not strong enough to impact the oil price seriously.

Brent crude LCOc1 traded up 7 cents at $53.94 per barrel at 1348 GMT (9:48 a.m. ET), after a low of $53.20.

U.S. light crude CLc1 was up 10 cents at $51.23.

The OPEC countries, onwards with Saudi Arabia, and other producers including Russia will meet on May 25. They are going to extend a pledge to cut output by 1.8 million barrels per day (bpd). The cuts might possibly go even deeper. And they will last at least until March 2018.

The cuts were initially agreed to last six months until the end of June. But as discussed later, it is decided that Oil market would gain better back up if the prolonged cuts last 9 months.

 

Kuwait

Essam al-Marzouq, Oil Ministed of Kuwait said today that not all OPEC countries and its allies supported a nine-month extension. So the producers would discuss this week precisely whether to extend output cuts by a six or nine months.

There are many sources which say that they predict a smooth meeting with a nine-month extension likely to be agreed.

“OPEC meets on Thursday amid increasing optimism that the production cuts agreed last November will be rolled over and most likely to the end of 1Q18,” Colin Smith, analyst at Panmure, said in a note on Tuesday, adding he expected a rollover would “likely deliver a significant tightening of the market.” (Reuters)

 

Early trade today

Earlier today, oil prices declined a bit, on the White House plan to sell off half of the nation’s 688 million-barrel oil stockpile.

The budget, to be delivered to Congress on Tuesday, is only a proposal. So it will not take the real effect in its current form.

“Congress needs to agree to this which is rather uncertain,” said Carsten Fritsch, commodity analyst at Commerzbank. (Reuters)

 

Allies in OPEC deals

 

Carlos Perez, Ecuador Oil Minister said OPEC and other oil-producing countries are going to discuss a six- or nine-month extension to output cuts and probably choose the latter.

“Six and nine months are both proposals on the table … we will support the majority, probably the nine months.” Perez told reporters after arriving in Vienna today.

When asked whether deeper cuts would be discussed, he said: “Not at this point, I don’t think so.”

Noureddine Boutarfa, energy minister of OPEC member Algeria, said OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the group’s existing deal.

“Right now we are talking about nine months,” Boutarfa said.

Khalid al-Falih also arrived in Vienna on today, but didn’t want to comment to reporters.

There were some comments among delegates that they do not expect major surprises. Everything is pretty clear so far.

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OPEC, hedge funds and the Sistine Chapel

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The most important Events in the Market Today:

  1. Oil is extending rally as investors wait for OPEC meeting on Thursday
  2. Global stocks mostly higher as markets recover poise
  3. Dollar creeps up off 6-month lows
  4. British pound slides as U.K. threatens to quit Brexit talks
  5. Bitcoin tops $2,100 for the first time!

For further info on these subjects, visit: www.investing.com

 

OPEC story

The story begins in the summer of 2016. Mohammad Barkindo had met Ed Morse in the Vatican’s Sistine Chapel.

It was unusual encounter which led to a later numerous important events.

The chat between two of them, at an energy industry event held in the Chapel, has caused OPEC to reshape the way of doing its businesses. It changed the way OPEC deals with hedge funds. And as well its influence in global oil market.

Barkindo, having had to deal with an oil price slump of that time, told Morse that OPEC aims to understand the way financial players worked in the oil markets.

“It was at the Vatican that we first discussed the idea of OPEC reaching out to the financial players in the oil markets.” (Barkindo)

“The world of oil has changed, including the fundamentals and its dynamics. And so must OPEC.”

He said Morse helped in organising a meet up for OPEC officials with hedge funds at the end of 2016.

“We went further to break the Berlin Wall with tight oil producers and met them in Houston in March.” (Barkindo said for Reuters)

 

Khalid al-Falih and his team

 

In different locations and meetings, Khalid al Falih and his team held discussions with hedge funds. They also met top trading houses Vitol and Litasco in Vienna in November, before the previous OPEC meeting. (According to some non-official news.)

Falih’s predecessor, Saudi oil minister Ali al-Naimi, often took advice from oil market consultants, but also often gave advice to hedge funds saying: “Leave the market alone”.

Now the situation has changed.

“As the market got increasingly financialised, the Saudis and others at OPEC understood and accepted it is not just driven by fundamentals and decided it was worth engaging with those who move the market short-term.” (Reuters)

 

Whatever it takes

Observing the past two months, Falih has couple times used the phrase by Mario Draghi, from his successful bid to defend the euro.

OPEC will do “whatever it takes”, to reduce the oil glut, says Falih.

Hedge funds bought firmly into the oil market late last year. When it became apparent OPEC is going to cut production. They have heavily sold those positions in recent weeks, stalling a recovery in oil prices near $50 a barrel.

“It is exceptionally important for producers to understand the behaviour of financial market players and what they think about future price trends.”

This time OPEC will definitely do whatever it takes to achieve the kind of equilibrium, and stability in global Oil market.

 

 

 

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Next Week Forecasts

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Important weekly events (Short Recollection)

Friday was a day when Oil futures came to a four week’s high. The prices scored a weekly rise of more than 5%. And most noteworthy the optimism on upcoming production cuts rose the positive expectations and market movement. The cuts will be extended to next 9 months. Starting from June 2017 and entering the March of 2018.

U.S. West Texas Intermediate crude leveled up for 98 cents. Counted in percentage that is around 2%. It reached a price of $50.33 at Friday’s close. Observing the period of last 4 weeks, this was the highest price.

Later, the U.S. benchmark rose for $2.49. Which makes it about 5% up weekly.

Meanwhile, ICE Futures Exchange in London saw the price of Brent Oil at $53.61 a barrel by the close. The daily peak was even higher, at %53.82. Which was the unseen level since April 19th.

London-traded Brent futures gained $2.77 on their price. If calculated in percentage, it is the exact 5.2% for the week.

The production cuts will be extended to the next 9 months. Rather than the 6 previously agreed. There are signs of their possible deepening, but it is still not sure. We will definitely know on Thursday.

The fuel rose for 6% on weekly basis. June heating oil also finished at $1.582 a gallon, which makes it 3.7 cents up for a unit.

 

The upcoming Week

The economic events taking place in the week ahead will be very significant for global economy. Traders will all focus on OPEC highly-anticipated meeting. Where the major producing countries will decide on extending the production cuts.

 

Chronology of daily economic events which will impact the market next week:

  1. OPEC Meeting

2.Fed FOMC Meeting Minutes

3.U.S. Revised 1st Quarter Growth Data

  1. U.K. First Quarter GDP – Second Estimate

5.Flash Euro Zone PMIs for May

 

Upcoming week in Numbers & Data

Also worth mentioning, The American Petroleum Institute is going to publish its weekly report on U.S. oil supplies on May 23rd.

On Wednesday, May the 24th, EIA will release the weekly report on data about Oil and Gas.

Later, Thursday meeting is definitely the most important event of the week. The upcoming FINAL decision of OPEC and non-OPEC oil producing countries, about prolonging the outputs. Taking place in Vienna.

Finishing with Friday the 26th, when Baker Hughes will show some weekly reports on U.S. shale drilling, and numbers which put up close the U.S. oil production.

Focus is set directly on Oil prices, and long-term Oil market stability, as an aim for global participants.

In conclusion, the upcoming week will be a bit tense, certainly agitated, interesting to observe, inspiring to comment on. And for sure challenging for all the main market participants. And all the traders and investors who hold their stakes in the market and are waiting for the concrete outcomes.

 

 

 

 

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Extending Oil Cuts; Oil price soon peaking $60

Khalid al-Falih today said that Oil output cuts are definitely going to take its place till march 2018; Global Production cuts are going to recover Oil market in further 5 years. As it is planned. The aim of OPEC and non-OPEC allies is to curb the outputs and lift the Oil prices, in order to achieve rebalance in the ”healthiest” way. This way Oil inventories will be reduced, which leads producing countries closer to their goal:

 

“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers … will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018.” (Khalid al-Falih, Ryadh)

OPEC’s idea is to conduct the global oil inventories in next 5 years.

Non-OPEC Russia, and The OPEC countries along with the other producers originally made a deal to curb outputs by 1.8 million bpd. Starting January the first, and taking place at least next 6 months. Now is the 5th month of previously mentioned cuts, and the global aim is to rebalance the market by prolonging them.

 

Prices

Following the simple laws of economy, the oil prices have gained backup from curbed outputs.

In a meeting of Saudi Arabia and Russia previously this month, the two main producing countries agreed that these further cuts are going to be of a huge value for global Oil supply. Also, market sometimes needs a hand of help in order to function effectively.

The subject of deepening the Cuts was also mentioned. All of this in order to drain inventories and give some decent back up to the Oil prices.

For those familiar with the subject, it is clear that OPEC organization has huge power in its hands. And a long-time positive branding scale, which gives it credibility and possibility to conduct the Oil market movements.

 

 

ECB

The Economic Commission Board is the panel which precedes the May 25th and the main OPEC meeting. It serves for all the possible options to be discussed, and that way to bring the pre-final-decisions, for scheduled May 25th.

Sources say that the Exact amount of discussed deeper output cuts was not mentioned.  Some countries allies did not receive the news about the deeper cuts so likely. But it is actual subject which will be considered in a final meeting, and it also may impact the market.

OPEC is asking some other Oil producing countries to join the current deals. To enter the supply pact and together make the bigger impact on prices. Turkmenistan, Egypt, as well as the Ivory Coast agreed to attend the meeting on May 25th.

The conclusion is pretty clear. Oil output cuts are willy-nilly going to take place after the meeting. That way, global Oil prices are going to gain support and help the 5-year plans; aiming to rebalance the market.

 

 

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May the 25th: OPEC is definitely extending Oil output cuts (forecast)

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Vienna, final decision:

 

May the 25th, and the meeting in Vienna, is crucial date for Oil market. The day when everything is going to be way more clear. Also the day when OPEC will again show that despite all the concerns and all the market fuss it still holds the power over Oil Market;

Presently, the numerous discussions are being led on this subject. Furthermore there are many predictions and different attitudes about the 25th’s outcome.

However, based on the numerous information and data coming straight out from current market events , it is very likely that the Oil cuts are going to prolong. They may even become deeper and that way impact the market forcefully.

 

Pre-meetings: Wednesday & Thursday

 

The OPEC’s officials, as well as the representatives of 13 league countries, along with OPEC’s Vienna secretariat held meetings on Wednesday and Thursday. Discussing the market, and agreeing on the forthcoming decisions.

Some OPEC sources are saying that the Meeting of Economic Commission Board will be concluded in Friday (today). Although it should have been finished yesterday.

“We have not agreed on final scenarios…”

 

Different sources:

 

There are sources which predict that OPEC’s extension will depend on estimated growth in supply from non-OPEC producers and U.S. oil outputs; but one thing is for sure, OPEC’s power over Oil market is still the strongest.

Even Saudi Arabia and Russia agreed that Further output cuts are desperately needed in order to keep market stabile. The extension will be for sure agreed until March 2018.

The final decision will be the outcome of Thursday, May the 25th when all the OPEC and non-OPEC Oil producers (allies) will together agree on prolonging the cuts in oil production.

Now the Oil prices which are trading at level of $53 a barrel, earned their support from reduced output due to high inventories.

Also the producers which are not the members of OPEC family, and those who are not participating in these cut deals; lowered their production and limited the drilling.

“Today’s meeting is just informative, nothing major…”

Reuters is reporting that by some of the OPEC sources, today’s meeting is only going to be informative. No final agreements will be brought. But it is definitely important for definitive decision which is about to come out on May the 25th.

“Brent crude was up 63 cents at $53.14 per barrel at 0813 GMT. After climbing to $53.20, its highest since April 21… U.S. benchmark crude was up 61 cents at $49.96 a barrel.” (Reuters)

 

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Vessels with U.S. Oil en voyage to Asia; as OPEC measures extending cuts

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TOP 5 events in Today’s Market:

  • More Trump drama as White House turmoil deepens
  • Dollar struggles to recover from worst day in almost a year
  • Global stocks extend slump amid Trump jitters
  • Oil slides as investors weigh U.S. drilling, extended OPEC cuts
  • British pound rises above $1.30 for first time in 8 months

For further info on these subjects: www.investing.com

 

Cargoes:

According to current news, nearly 8 tankers are now en voyage from the U.S. to Asia. The one of them is carrying a cargo of Southern Green Canyon oil. Which japanese refiner Cosmo Energy bought. The other carries Alaskan North Slope cargo which is expected to come to Asia in about eight months.

The United States drillers are using the favorable prices to sell their Oil and that way they are strongly affecting the market. It is making OPEC less powerful to impact the global Oil market. The next week is crucial for Oil prices and movements in Oil market, because OPEC is going to meet in Vienna on May the 25th.

The market members, and all the OPEC allies are trying to leave the oil output at a current level, but the U.S. drilling is constantly affecting all the market happenings. Their ”relatively cheap” prices have buoyed exports going to Asia.

 

The forecasts for further U.S. Oil output:

U.S. Oil is expected to gain a quantity of 1000000 bpd, with most of it going straight to Asia. U.S. crude oil exports already came to a level of 1.09 million bpd. Observing the recent drilling (period of past few months) those are the levels highest on record according to U.S. government data. In case these amounts remain elevated, it can happen that they come over the 1.2 million bpd. 1.2 million was the February’s amount.

“We expect that momentum to continue when Dakota Access Pipeline opens, and as more Permian production hits Corpus Christi docks.”  (Sandy Fielden, director of oil and products research at Morningstar said) (Reuters)

Based on EIA info, United States Oil production rose for 10%. Which shows that levels of 9.3 million bpd are serious levels, and that if the production goes further, OPEC’s role in the global market will be really questioned.

 

Tempting Arbitrage:

Wednesday(17.05.) was the day when U.S. crude touched a 6-week high. It Immediately affected the traffic going to Asia; It shows as an possible extension of U.S. exports finding their way to Asian customers.

– “Early May spot prices showed both Brent and Dubai trading at around a $3 per barrel premium to Brent and WTI Cushing, which is an open window,” said Fielden. (Reuters)

Bahamas-flagged Suezmax is carrying Alaskan North Slope crude oil to Asia. This is based on the Vessel tracking data. Half of this crude is sold, half is unsold. (Reuters)

In the meantime, the Cosmo Energy has an Aframax vessel Almi Star with 300,000 barrels of Southern Green Canyon crude and Domestic Sweet Blend outside of Houston. Later it is picking up for further 300,000 barrels of Maya crude at Dos Bocas, Mexico.

This ship will go through the Panama Canal. Afterwards it will transfer crude to a larger Suezmax vessel loaded with 400,000 barrels of Mexican Maya crude for a voyage to Asia.

When asked to comment on this subject, The Suezmax P66 refused to comment.  Actually they did not answer the e-mail on this, while the Cosmo Energy refused to comment.

 

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Libya, Nigeria oil output causes worries, geopolitical risks still present

Growing oil output in Libya and Nigeria is causing worries on OPEC’s ability to boost up crude prices.  Also, constant conflicts in the two nations might possibly keep a cap on their output.

Libya’s production came at levels higher than 800,000 bpd. It is the first time since 2014. Back then the civil war broke out. In the meantime, Nigeria is refreshing big infrastructure damages; caused by military attacks. Last year, they almost cut country’s production for 50%.

Libya

Libyan commander said to put out a power-sharing agreement, which will be beneficiary for country un every way. It will also have impact on oil supply. They have sent the General Khalifa Haftar to meet with UN-backed Prime Minister Fayez al Sarraj.

Still the ”risk officials” believe it won’t be easy to keep stability in next few months.

Impacted by these happenings, the firm projects oil exports will fluctuate between 500,000 and 700,000 bpd. Till the end of 2017.

Following, funding problems and a lack of foreign workers at the National Oil Corp is definitely going to limit the risk that oil output will boost.

Geopolitical risks still remain very high in Libya.

 Nigeria’s militants ended their attacks on infrastructure

Niger Delta Avengers, known as a Nigerian military group which attacks the infrastructure projects, now ended their ”operations”. And at the same time they allowed major pipelines to continue pumping crude oil again.

The militants earlier requested for a larger share of the nation’s oil wealth for Deltans. They now feel like they have a voice in the capitol.

Simultaneously, the non-military approach used by Osinbajo, which includes promises of development money, has undercut the case for militancy.

But President Muhammadu Buhari has been abroad for much of the year receiving treatment for an undisclosed illness. That creates a political opportunity for vested interests in Buhari’s inner circle, who are uncomfortable with the northern-born president’s relatively close relationship with his deputy. This could undermine militants’ trust in the capitol to the extent Osinbajo is marginalized. (CNBC reporter)

“At the moment it would be very difficult, but not impossible. I can’t see a path to that kind of outcome, but this is Nigeria,” said a Nigerian source.

RBC Capital Markets lists Nigeria at its highest geopolitical risk level, due to “the potential for a turbulent political transition.”

Exemptions continue?

Despite concerns about growing oil supply, there is no sign yet that OPEC will push Libya and Nigeria to turn off the tap when they meet next week.

The cartel could ask a production shutter similar to one given to Iran. Iran is allowed to raise outputs to a certain point. As it is rebuilding its energy industry, after years and years of crippling sanctions.

Nigeria’s oil minister said in January his country will consider reductions once its output returns to 1.8 million barrels a day, but he didn’t say how deeply it would cut.

“It remains to be seen whether there’s political will behind that.” Cheto said. “A lot of that will depend on whether Buhari consents to it.” (CNBC)

 

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Iran agrees on extending the cuts, if allies sign

17 May, Wednesday: You should know about Today’s Market:

  • Concerns over Trump dominate headlines
  • Fed rate hike bets continue to recede
  • Dollar continues decline, gold strengthens on stimulus delay concerns
  • Global stocks shift to risk-off mode on Trump worries
  • Oil slips on crude inventory build

For further info on these subjects, visit: http://www.investing.com

Iran’s Oil

According to some unofficial news coming straight from Iran, the OPEC’s third largest producer is interested in participating in further oil output cuts. In condition that there is of course, an agreement between other participating countries.

Saudi Arabia and Russia, concluded a deal on Monday saying they will extend output cuts for further 9 months, entering the 2018. The aim is to erode a existing glut. These 9 months would be more than 6 months previously discussed.

 

Kuwait

Kuwait, as one of the producers, said on Tuesday it supports the proposal.

Iran was the only OPEC supporter agreed to boost its output under the supply cut deal. It will hold presidential elections on Friday. The Iranian position is less predictable, but it will soon be very clear.

“This statement shows the commitment of OPEC and major non-OPEC oil producers to bringing stability to the oil market, in which is essential to have security of supply in coming years.”(Reuters)

– Iran will probably agree to a 9-month prolong of cuts, when OPEC and non-OPEC countries meet in Vienna,  on May 25. Assuming that other producers, for example Iraq, also will accept the deals.

 

Last year talks

Previous year, talking about the supply cut deal, Iran effectually argued to be allowed room to pump more, because it lost market share while being under Western sanctions. Back then they were raising the question of whether Tehran would sign up for a longer supply cut.

 

Presidential Elections In Iran

Friday is the day of presidential elections in Iran. President Hassan Rouhani is Facing 5 other candidates, for a second term, who are mostly prominent hardliners.

Bijan Zanganeh, Iranian Oil minister, in his speech on May 6, said he thinks producers are likely to extend the OPEC-led deal whiles he did not give a timeframe. He also added, by some real forecasts $55 is suitable price for oil.

Prices have gained back-up from the supply cut pact. But also, high inventories and rising U.S. production have acted as a brake on the recovery. Brent crude was trading at $52 on Tuesday.

“Low oil prices may bring satisfaction for some consuming countries in the short run, but in the long term as a result of reduced investment in new oil production, they could end up paying a much higher price for a barrel of oil.”

Some of the analysts predict a humble price recovery as likely in the summer months. In summer months it happens that U.S. gasoline demand seasonally rises, citing factors such as a likely drawdown in inventories.

“I think prices will move up to $51-$55 and in August may go to even $58.

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