Opec sees rise in oil demand next year

Crude Oil

With West Texas Intermediate, the USA benchmark for the price of oil, trading at a significant discount to most other rival grades, industry analysts said it's likely that more, not less, US crude oil will wind up on the global market.

According to media reports, Saudi Arabia would cut its November crude oil allocations to customers by 560,000 barrels a day, according to Andrew Lipow, president of Lipow Oil Associates.

Ahmad writes that OPEC Secretary General Mohammed Barkindo has surprised many ahead of the upcoming OPEC meeting on November 30 in Vienna, by calling on US shale producers to join forces with OPEC in its ongoing battle to reduce the persistent oversupply of oil in the market. From a technical standpoint, United States crude has staged an impressive rebound from the $49.08 level and a decisive breakout above $51 should encourage a further incline towards $52.40 a barrel, said Lukman Otunuga, research analyst at FXTM. It said that Aramco planned to supply 7.15 million barrels a day, "despite a very strong demand", which exceeds 7.7 million barrels a day.

In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bpd, while Russian Federation and other non-OPEC producers are cutting half as much, until March 2018.

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"This news shortly follows the historic visit of the Saudi King to Moscow, and we know that both of these nations are among the highest contributors to global oil production", said Ahmad. However, many facilities have begun resuming operations. The pact expires in March, and oil producers are debating whether to extend it later into the year. The U.S. Department of Energy reports official data on Thursday.

USA crude inventories probably fell for a third straight week, while refined product stockpiles also likely declined, a Reuters poll showed. Some analysts have been concerned that a price recovery could tempt producers to open the taps again. OPEC does not issue price forecasts. "Stronger-than-assumed economic growth offers the potential for tight market conditions to continue if OPEC extends the current deal for another nine months", the bank said.

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