Oil Prices to Go Up as OPEC Drops Supply

Oil Prices to Go Up as OPEC Drops Supply

Oil Prices to Go Up as OPEC Drops Supply

Russian Federation and other non-OPEC producers agreed to cut half as much. Seemingly out of nowhere, there's been a most unexpected resurgence in oil production for Libya and Nigeria.

Due to oversupply, several banks were encouraged to cut their forecasts for crude, which resulted in fall of oil prices.

When oil prices finally rose in January, so did cheap shale oil output in the United States, as USA producers viewed slightly higher fuel prices, even at the cost of a full market recovery, as an opportunity to bring new rigs online in the Permian and Bakken formations.

Oil may slip below $40 a barrel unless there are sustained inventory declines and a drop in the rig count, while evidence of further OPEC actions could help prices rally, Damien Courvalin, an analyst at Goldman, said in a note dated July 10.

The statement also remarked that considerations are offered to not only Nigeria but also Iran and Libya and that would mean that for 2017, other member countries would seek to cut output and these countries are expected to increase in production.

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Kachikwu has said that Nigeria was not opposed in principle to joining OPEC's production cap, but would have to wait and see if production returned to acceptable levels.

The ministerial talks would be preceded by a meeting of a technical committee involving all OPEC and non-OPEC members now participating in the oil output-cutting deal. On July 10, 2017, Libya stated that it would attend the meeting on July 24, 2017. Nigeria's crude oil production was at 1.2 MMbpd in August 2016.

Light sweet crude oil (WTI) futures gained 0.17 dollar or 0.38 percent to close at USD 44.40 a barrel at the New York-based commodity exchange NYMEX. However, OPEC and non-OPEC producers should consider Libya's political and economic situation before capping production.

Crude prices are around 18% below from the levels in the beginning of this year despite Organization of the Petroleum Exporting Countries efforts to reduce production from January.

But OPEC's Secretary-General, Mohammad Barkindo, said in Istanbul that it was premature to talk about that option. Producers have reportedly begun to consider asking the two nations to limit their output.

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