Times of Oman
Jul 28, 2017 Last Updated at 13:41 AST
Crude oil to trade below $60 this year as high stocks persist
March 20, 2017 | 5:43 PM
by Bloomberg News
The inability to balance the market in the first half of the year will mean the Organisation of Petroleum Exporting Countries should extend the six-month deal, which took effect on January 1, for the rest of the year. - Bloomberg News
 
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Dubai: An historic agreement between Opec countries and other oil producers to reduce their output would not be enough to nudge crude prices above $60 a barrel this year, according to energy lender Arab Petroleum Investment Corp.

Consumer countries have built up large stockpiles of crude during nearly three years of low prices, and US shale production is rebounding as prices have recovered since Opec reached the production deal in November. That means the process of balancing the market will take at least until the second half of this year, the company known as Apicorp said on Monday in a report.

The inability to balance the market in the first half of the year will mean the Organisation of Petroleum Exporting Countries should extend the six-month deal, which took effect on January 1, for the rest of the year, it said. Opec meets in Vienna on May 25.

"While oil prices are expected to recover toward the end of the year, they will remain in the $50-$60 band given the high level of stocks,” Apicorp said. "We expect Opec to maintain the agreed production quota at around 32.5 million barrels a day for the rest of the year.” Brent crude was trading at about $51 a barrel at 10:26 a.m. in Dubai.

Opec will extend the deal if stockpiles are still above their five-year average, Saudi Arabia Energy Minister Khalid Al Falih said in an interview with Bloomberg Television last week. As Opec’s largest producer, the Kingdom acts as the group’s de facto leader. Still, any deal or measure needs the unanimous support of all members to pass; the group’s second- and third-largest producers Iraq and Iran also carry significant clout.

Apicorp, based in Dammam, Saudi Arabia, is owned by the 10 member states of the Organisation of Arab Petroleum Exporting Countries, with Saudi Arabia, Kuwait and the United Arab Emirates each holding 17 per cent, according to its website.


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