The contemporary global market of crude oil may well go from oversupply to seeing a deficit in 2017. This is what several respected experts working for the International Energy Agency thing on the matter. For starters, this scenario need a major trigger in the form of signing the promised oil production cap agreement reached verbally by OPEC members in late September in Algeria.
To be more specific, the expected agreement is intended to cap OPEC’s crude oil production at the level of 33 million barrels a day. This is what the IEA experts say in their November report. The thing is that this is now the only hope for oil nations to get oil prices going higher and allowing them to make bigger profits from their oil exports. If OPEC fails to sing the long-awaited agreement, we are likely to see oil prices go further down on even higher overproduction and oversupply around the globe. In this case, there cannot be any change to see a price rally in the oil market in 2017.
At the same time, OPEC reports that the global production of crude oil increased by 800K barrels a day in October 2016 alone. Even though some non-OPEC oil producers actually cut their oil production, OPEC is still covering this production cuts and making the global production go up. The IEA reports that OPEC produced 33,8 million barrels a day in October, which is a new record high. On top of that, despite constantly talking about the necessity to cap and even cut their oil production quotas, OPEC members have actually been increasing the production. This has been going on for 5 months in a row.
To be more specific, the IEA is currently witnessing higher oil production in Libya, Nigeria, and of course Iraq (some 4,6 million barrels a day), not to mentioned Iran. Anyway, whatever the result of the forthcoming OPEC summit is going to be, this is definitely going to be the decisive event for the near-term future of the entire international market of crude oil. That’s for sure! The OPEC summit is planned for November 30th, 2016.
