Don't Expect Oil To Trade North Of $60 In 2017
The Organization for Oil Exporting Countries (OPEC) reached a historic agreement that calls on OPEC members and non-member oil nations alike to lower their collective output to help boost oil prices higher.
The problem is the OPEC agreement isn't sufficient to sustain a longer-term recovery in oil prices, according to the Arab Petroleum Investment Corp (Apicorp), a development bank wholly owned by the member states of the Organization of Arab Petroleum Exporting Countries (OAPEC).
According to a Bloomberg report, Apicorp said in a separate report on Monday that oil prices are likely to trade in a range of $50 to $60 per barrel through 2017 and are unlikely to move higher than those levels for two key reasons. First, years of low oil prices resulted in many countries building up large stockpiles of crude. Also, U.S. shale production continues to gain momentum and is viewed by some as being a formidable competitor to OPEC in the global energy market.
Will OPEC Extend The Agreement?
Meanwhile, OPEC's agreement to limit supplies is set to expire in the summer and an OPEC meeting scheduled for May 25 could focus on reaching a consensus on extending the agreement.
Apicorp also noted in its report that it expects the OPEC agreement to be renewed and maintain the agreed production quota of around 32.5 million barrels per day through at least the end of the year.
The Bloomberg report also noted that Saudi Arabia's Energy Minister Khalid Al-Falih said that his country which happens to be the most influential OPEC member would agree to an extension of the agreement if stockpiles are still above the five-year average.
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