OPEC Expected to Extend Cuts for at Least 6 Months
OPEC+ will agree to extend production cuts for at least another six months to 2020.
That’s what analysts at Fitch Solutions Macro Research believe, according to a new report sent to Rigzone on Thursday.
“The lack of sustained price gains indicates that the cuts have been ineffective in their aims and that markets believe continued cuts will be necessary to maintain prices given the souring global economic growth story,” the analysts stated in the report.
“The only scenario we see for production cuts to end successfully would be if prices topped $85 per barrel for six months at minimum,” the analysts added.
“If this were the case most OPEC members, notably Saudi Arabia, would be in better fiscal position allowing for the cuts to end and prices to moderate at lower levels,” the analysts continued.
Last week, Jason Gammel, an equity analyst at investment bank Jefferies, expressed in a research note sent to Rigzone that an OPEC+ extension of production targets through the rest of the year seems “highly likely”.
In a research note sent to Rigzone earlier this month, Gammel said it seemed increasingly that between inventory builds and price action OPEC+ will need to extend production cuts into the second half of the year.
The 176th meeting of the OPEC conference is scheduled for July 1 and the sixth OPEC and non-OPEC ministerial meeting is set to take place on July 2, according to OPEC’s website. OPEC was previously scheduled to meet on June 25 and a combined OPEC and non-OPEC meeting was set to occur on June 26.
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