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.


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.


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


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.



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.

OPEC, hedge funds and the Sistine Chapel


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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.




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.



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.




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.



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


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)


Iran agrees on extending the cuts, if allies sign

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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, 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.

West Texas drillers could weaken any OPEC agreement on extending the cuts

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All the Oil producing countries which have a deal with OPEC, along with Russia, can extend their deals. But at the same time this will be a green light for United States oil producers.

If the price oscillates following levels between $50 and $60, these are the great news for the U.S. oil drillers. They will gain profit on way broadly group of drilling sites. OPEC’s new deal could speed up the market rebalance. Rather, the numerous U.S. shale drillers could also release bigger amounts to surpass OPEC’s price gains.

Mainly the market analysts wait for oil price to rise close to $60, or even $60 by the end of the year.  But the prices are not expected to climb much higher.

“Basically U.S. supply is coming on faster than we anticipated. Now you have a higher inventory level to begin with, and a slower decline. That means in our view, prices are likely to be lower on average.” (Francisco Blanch, Bank of America Merrill Lynch.)

“The Brent crude will come to average $54 per barrel this year, from an average $61 per barrel. ”

He doesn’t expect much of an increase neither for 2018. The Brent will probably gain the price of  $56 per barrel, versus his previous forecast of an average $65.


Different opinions

Ed Morse from Citigroup said he thinks it would be a way better if the OPEC agrees on a deeper cuts.

“I think this market will re-balance itself very quickly. The extension alone should result in deeper cuts.”

Deeper cuts would mean an “invitation for cheating” and “a sign of desperation in markets.” He explained that the re-balancing is already happening.

On contrary, Blanch said: “I think it’s pretty risky to deepen the cuts when they’ll be losing market share to shale. It seems to me that Saudi, Russia, and even the U.S., everyone needs oil price leveled at $60. The problem is, that by the laws of nature as well as of the economy, you can’t have both the quantities and the prices.”

Morse: “We don’t think U.S. production is going to stop the re-balancing of the market this year. It’s not enough to counter the cuts that are in place, particularly if they’re being extended.”

“We think next year will be more problematic. The shale drilling will accelerate and U.S. shale alone could meet the new demand in global growth.”


U.S. drillers

IHS Markit expects U.S. shale to grow by 900,000 bpd by the end of 2017. By the end of 2017, or entering the early 2018 the U.S. will be giving the record amounts of oil. Based on some U.S. government reports, their production rose to 9.3 million barrels in previous weeks.

“You can certainly say a lot of shale today will be competitive between $40 and $50 a barrel. The question mark is what’s going to happen with costs. We really think the costs this year in the Permian will go up 15 to 20 percent.”  (Daniel Yergin vice chairman of IHS said. “Rising costs will temper activity somewhat.”

Yergin stated that shale is now at medium cost production.

Permian, West Texas

Permian is currently the most active shale. But drilling could open up Eagle Ford in Texas or Bakken in North Dakota, following the upsurge in prices.

“Other plays still remain on the sidelines in this $50 environment. When we were growing at a million barrels in the U.S., it wasn’t Permian. It was Bakken and Eagle Ford.” (Helima Croft, RBC)

“The other thing about shale is it has a very high decline rate. The shale did come back stronger. Rigs are returning and for now it remains largely a Permian story.”

Analysts have expected the market to get a backup from the summer driving season. So far, U.S. gasoline demand has been softer than expected.  That could definitely impact the market, and it should see higher prices this summer .


The upcoming week: Crude Oil Futures

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Short Recollection of last week


Beginning by observing the Oil futures; they settled on nearly plane levels on Friday. But still registered the first weekly gain in a month. Inspired by the news that key crude producers will extend output cuts to the period after June;

Firstly, on Thursday, U.S. West Texas Intermediate crude came to the highest since May 3 at $48.22.

Secondly, the U.S. benchmark went up for $1.62, or around 3.4%, after posting three consecutive weekly declines.

Noteworthy, in London Futures Exchange, Brent oil for July delivery added on 7 cents. Later coming to settle at $50.84 a barrel by closing. The global benchmark hit $51.16 a day before. This level was not seen since May 2.

Thirdly, observing the weekly movement, London-traded Brent futures recorded a gain of $1.74, or nearly 3.5%.



OPEC and non-OPEC oil producing countries  are discussing the extension of a global supply cuts.

Recently, some officials have suggested the possibility of further & deeper production cuts to help clear a supply glut & rebalance the market completely.

Starting this week, crude sank to a five-month low. Loped by concern over increasing U.S. crude output that has shaken investors’ faith in the ability of OPEC to rebalance the market.

Fourthly, data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 17th week in a row. Indicating that further gains in their production are ahead.


The further U.S. drilling

The U.S. rig count rose by 9 to 712, extending an 11-month drilling recovery to the highest level since August 2015.

Observing natural gas futures for June delivery, they rose 4.8 cents. Which makes it the highest level since January 26 at $3.424 per million. British thermal units, up 1.4% for the session and about 4.9% higher for the week.

All the participants in the market race will see recent weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday.  To groove the strength of demand in the world’s largest oil consumer.


Meanwhile, investors will keep an eye out for a monthly report from the IEA for further evidence that global producers are complying with an agreement to reduce output this year.


Inspired by; here are some important next week’s events which will likely have impact on market & commodity trades:


Tuesday, May 16

The IEA is going to publish its monthly evaluation of oil markets.

Later in the session the API will publish its weekly report about U.S. oil supplies.


Wednesday, May 17

The U.S. Energy Information Administration is to release weekly data on oil and gasoline reserves.


Thursday, May 18


United States government will give a weekly report about Gas supplies reserves.


Friday, May 19

Baker Hughes operates in more than 90 countries, giving the oil and gas industry  info with services for oil drilling, formation evaluation, completion, production and reservoir consulting. It will release weekly data on the U.S. oil rig count in Friday.


Oil Production; Summary of Main Oil News this week

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Russian energy ministry and output cut talks

The main official of Rosneft, Igor Sechin, said on Saturday that the Russian energy ministry had his backup in discussions over oil production cuts.

“The most important thing is to have a mechanism to defend our interests.”

In previous months, Sechin has expressed some suspicions about the ability of the OPEC. And its power to influence oil markets amid a shale oil production boom in the United States.

The countries: Oil producers, including OPEC and non-OPEC; agreed to cut output for 1.8 a day. This decision dates from last year, and will be active till June the 30th. It aims to reduce global oil inventories.

The Oil producing countries will meet later this month in Vienna, to discuss a possible extension of the deal.


Georgia nuclear plant construction (Southern Co)

Georgia Power and Westinghouse decided to transfer the Project management of Georgia nuclear power plant expansion, to Southern Co.


The temporary agreement until June 3 will allow construction of the plant expansion to continue.

Westinghouse Electric Co filed for bankruptcy in March, was hit by billions of dollars of cost overruns. At four nuclear reactors under construction, including at the Georgia project and another in South Carolina.

The Georgia project is owned by a group of utilities led by Southern Co.

Gasoline in India

Firstly, the gasoline consumption growth has been slowing since the middle of 2016, after rising for the previous two years.

Secondly, observing the last 9 months we see that consumption growth for most other fuels used for cooking and transportation is also slowing down.


Based on the current data, demand for liquefied petroleum gas and kerosene used for cooking, heating and lighting as well as diesel used for transport; all show signs of leveling off or falling in the first four months of 2017.

These trends maybe come from the demonetisation of large-denomination bank notes in India. They were announced at the start of November as part of the government’s anti-corruption campaign.


Crude Oil prices Impact:


Rising crude oil and refined fuel prices over the last year are also likely to have constrained the growth in consumption and other fuels.

Observing the retail gasoline prices, we note that they rose by around 10 percent between January 2016 and January 2017. While diesel prices climbed by almost 8 percent. (Ministry of Petroleum and Natural Gas)india

India’s middle class is pretty sensitive to increases in prices & costs, so they are curbing a demand for Oil. Their middle class, urban as well as rural, is emerging very fast.

Nevertheless the recent slowdown in consumption growth for gasoline and other fuels, it is too early to determine if the deceleration is temporary linked to demonetization and price rises or something more lasting.

India as a source of oil demand:

Noteworthy, India has been one of the most important sources of oil demand growth during the cuts. So any extended slowdown in consumption growth, would make the mission of global market harder. The rebalancing will be way more complicated.