Published: Thu, October 12, 2017
Markets | By Erika Turner

Oil prices stable in early going as OPEC sees return of balance

Oil prices stable in early going as OPEC sees return of balance

North American shale drillers have helped production soar by almost 10% in the USA this year, despite OPEC and some other producers, including Russian Federation, cutting supplies to prop up prices.

Oil prices were steady on Tuesday as OPEC said there were clear signs the market was rebalancing and as US production remained offline following Hurricane Nate, APA reports quoting Reuters.

Opec said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast.

Oil prices were virtually flat on Wednesday as Saudi Arabia said it pumped more in September than August, even as OPEC forecast higher demand for 2018.

"This news shortly follows the historic visit of the Saudi King to Moscow, and we know that both of these nations are among the highest contributors to global oil production", said Ahmad.

OPEC and other producers, including Russian Federation, agreed to cut output by 1.8 million barrels per day (bpd) through March 2018 to balance the market. Should Opec keep pumping at similar levels to September, the market could move into a deficit next year, the report indicates.

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OPEC's reluctance to cut output was also seen as a key reason behind the fall.

The Organization of the Petroleum Exporting Countries, Russia and some other non-member producers are cutting their collective output by about 1.8 million barrels per day (bpd) until next March to run down a price-sapping supply glut.

"A rise above that level would encourage USA oil producers to expand their drilling activities, otherwise the lower prices could lead to a reduction" in investments, it added.

OPEC's focus is on to jointly implement the supply adjustments in order to continue to accelerate the destocking to restore stability, Mohammed Barkindo said adding, if the balance is restored between demand and supply of crude oil, it would be in the best interest of the global economy.

"Oil prices are expected to remain at $50-55/b in the next year", Opec said.

A sharp increase in oil prices would tend to discourage consumption and thus growth.

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