The positive
reactions to the OPEC Ministerial
Meeting 172 followed by the second mutual meeting with non OPEC countries
continued on Thursday, revealing a wide
consensus in producers views on mechanisms and efforts to restore balance in
the oil market, That
producers agree on long-term cooperation will revive hopes of market recovery.
A
report by the Organization of the Petroleum Exporting Countries (OPEC) on the
results of the two meetings - that the producer countries outside the
organization and members of the Convention alphabetically are: Azerbaijan,
Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, the Russian Federation,
Sudan and South Sudan, who immediately supported the decision of OPEC to
continue cooperation between The
oil exporting countries for permanent stability in the oil market, represented
by the extension of production adjustments for nine months as of July 1, 2017.
The
report noted that the 14 member states of OPEC and its 10 non OPEC producers
agreed swiftly and profoundly on the importance of continuing efforts to help
support stability in the oil market for the benefit of all producers and
consumers of oil.
The
report said that the last meeting was keen to thank all participating
countries, both in OPEC and abroad, for their commitment to reductions as
indicated in the stated levels of conformity, which are unprecedented levels
and surprising and exceeded the agreed quotas.
The
report noted that participants at the meeting emphasized their broad commitment
at both the individual and collective levels to maintain the same level of
commitment over the next nine months and to continue to adjust production
levels more voluntarily and more effectively.
The
report pointed that the ministers of the producing countries expressed their
appreciation for the valuable contributions of the Joint Five Years Ministerial
Committee to observe the production reduction agreement and its technical
committee, where they succeeded during the past months in providing the levels
of transparency required in the implementation of the decisions and ensure
their application in a timely manner and in an equitable manner, Committees will
extend their work with the extension of the Convention.
The
report further clarified the agreement between OPEC producers and participating
countries to continue to review the cooperation between producers regularly at
the technical and ministerial levels, and agreed to further enhance joint
cooperation, including facilitating exchange of views and joint analyzes with a
view to ensuring sustainable oil market growth to meet the aspirations and
interests of Producers,
consumers, industry and the international economy.
For
its part, the Platts Oil Information Agency said that the decision to extend
the new production cuts for the next nine months comes within the framework of
the movement of "OPEC" and a number of major producers to support the
oil market and improve the level of oil prices after realizing the magnitude of
negative effects in the past years in the market and shrinking projects The
new oil, where they agreed on the need to return the flow of investment at a
good level.
"International
oil projects fell to $ 433 billion in 2016, compared with $ 700 billion in
2014, a drop of 25 percent a year, according to the International Energy
Agency, and projects that produce about six million barrels per day have been
delayed or canceled, In
OPEC countries or abroad.
"At
the same time, the demand for oil is growing by about 1 million barrels per day
every year, while the decline in field production is accelerated by depletion
of fields, which will negatively affect the supply and supply of global
oil." According
to the report, the global dependence on oil shale production in the United
States is growing, but logic confirms that even in the most optimistic
scenarios will be unable to rock oil and fill the gap between supply and demand
in the future.
The
report pointed that OPEC is mainly able to meet the expected shortage of supply
more than the rest of the producers because of their productive capacity and
high competitiveness, according to calculations of the International Energy
Agency, the demand for OPEC crude is expected to jump to record 35.8 million
barrels per day by the year 2022
compared to 32.2 million barrels a day in the world.
The
sharp increase in demand would mean that OPEC capacity would shrink to less
than 2 percent of global demand in 2022, its lowest level in 14 years, almost
half of 2008 levels when oil prices hit record levels .
The
report said that spending projects is the only way for the recovery of the oil
industry, pointing to the start of the return of final investment decisions for
projects since the end of 2016 and is expected to double this expenditure
globally this year.
The
report noted that there is a pressure on costs of at least 30 per cent since
the 2014 price crisis. Capital spending has been significantly curtailed,
citing high levels of efficiency and cost pressures, leading some US oil
producers to arrive at The price of the tie
at 50 or 60 dollars per barrel.
The
report pointed to the optimistic expectations of the international banking
group Citigroup, which sees opportunities to reduce the gap between supply and
demand in the future by allowing more production of projects in the glaciers
access to the market.
Citigroup believes it is necessary to support the growth potential of deep
water and oil sands, as well as the importance of technological improvements
that enable access to cost pressures and prevent any deflation in the medium
term.
The
report stressed that there will be more good news regarding the market balance
at the demand level, pointing out that energy efficiency may reduce the
relative growth of demand for oil, but demand will grow more and accelerated by
the broad economic growth and increase energy consumption, especially in the
Central Asia
with large population and high population growth rate.
Regarding
the alternatives to oil, the report pointed that there is a state of continuing
to increase dependence on natural gas as low carbon fuel in the next decades,
which will double the world dependence on liquid hydrocarbons.
On
the other hand, in terms of prices at the end of last week, oil prices
recovered to more than 1%, but ended the week a decline of nearly 3% following
the decision of OPEC leaders to extend production cuts did not meet the
aspirations of some investors.
According
to Reuters, trading was limited after Thursday heavy selling and ahead of a
long weekend in the US and UK. Brent crude for the month was up 69 cents, or
1.3 percent, to settle at $ 52.15 a barrel. Hit a
session low of $ 50.71 a barrel.
US
WTI crude futures rose 90 cents, or 1.8 percent, to settle at $ 49.80 a barrel
after hitting a session low of $ 48.18 a barrel.
Crude
prices fell 5 per cent on Thursday after OPEC decision, with some market participants
expecting deeper production cuts. Over the week, Brent futures fell 2.7 per
cent and US crude futures fell 1.1 per cent.
US
energy companies raised the number of oil rigs for the 19th week while
encouraging higher crude prices after OPEC decision to extend current producer
cuts to raise spending on new drilling activities.
But
the of growth as the overall increase since the beginning of May fell to its
lowest level since October due to low oil prices.
Baker
Hughes Energy Services said companies added two oil drilling platforms in the
week ending May 26, bringing the total to 722, the highest level since April
2015.
This
is more than double the number of rigs in the same week last year when the
number of drilling rigs was only 316, the lowest in more than six years.
The
rise in the number of oil diggers over a 19-week consecutive period is the
longest consecutive increase that ended in August 2011, according to data from
Baker Hughes back in the 1987.
Some
analysts are predicting that OPEC cuts are likely to have production from the
US Rocky Basin, where producers can work at a much lower cost.
