Oil Price Fundamental Daily Forecast – OPEC Extension May Be Less-than-Nine-Months
U.S. West Texas Intermediate and international-benchmark Brent crude oil are edging higher early Thursday ahead of an OPEC meeting in Vienna. Volume and volatility are below average as traders were cautious while producers debated an extension of the supply-cut agreement beyond the original March 2018 deadline. The OPEC-led program which includes major producers, including Russia, is designed to trim the excess global supply and stabilize prices.
OPEC is scheduled to hold an open session, including media, at 10 a.m. in Vienna on Thursday (0900 GMT), before going into a closed session at noon, according to a tentative program on OPEC’s website. Non-OPEC ministers are set to join at 3 p.m., followed by a joint press conference after the meeting.
Forecast
Although there has not been an official statement, OPEC and Russia appear ready to prolong their oil supply cuts until the end of 2018. There had been speculation the last few weeks suggesting that Russia may back out of the deal.
According to reports, the current consensus is that members will agree to an extension to the production cuts but the duration of the extension is uncertain.
The market has been pricing in a 9-month extension for several months so anything less could trigger an acceleration to the downside.
Even if OPEC and Russia agree to the full-extension, WTI crude oil prices may have a hard time sustaining a rally over the recent top at $59.05. This is because of soaring U.S. production. According to the U.S. Energy Information Administration, U.S. crude oil production hit a new record of 9.68 million barrels per day (bpd) the week-ending November 24. Some analysts are calling for this number to rise to 9.9 million bpd in December. This would bring U.S. output close to levels of top producers Russia and Saudi Arabia.
This article was originally posted on FX Empire
