OPEC Needs Output Cuts Until Late 2018

OPEC Needs Output Cuts Until Late 2018

OPEC is certain to extend cuts in oil output when its ministers meet later in May and will need to keep limiting production until as late as the end of 2018, a veteran market analyst said. The reaction of global crude inventories to the cuts will determine how long the Organization of Petroleum Exporting Countries and allied producers stick with their policy of pumping less oil to counter a global glut, said Fereidun Fesharaki, the head of industry consultant FGE. Oil may drop to as low as $40 a barrel if US stockpiles increase, he said, Bloomberg reported. “The probability that OPEC will agree to extend its cuts is at 100%,” Fesharaki said at the Middle East Petroleum and Gas Conference in Dubai. “And the cuts will have to be extended even beyond this year, to the middle or even to the end of next year.” OPEC and 11 other producers including Russia agreed in December to pare production by 1.8 million barrels a day during the first half of this year.

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