Oil Market - July 18
Posted: Tue Jul 18, 2017 2:57 pm
Oil prices continued to ratchet upwards, with WTI above $46 per barrel during midday trading on Tuesday. The latest gains come on rumors that Saudi Arabia could be considering deeper cuts to its supply. Bloomberg reported that Saudi Arabia is mulling cuts on the order of 1 million barrels per day (mb/d), or nearly twice its required commitment under the OPEC deal. More aggressive action might be needed as the most recent data shows OPEC compliance slipping, while at the same time the first member decided to pull out of the deal this week (see below).
Ecuador pulls out of OPEC deal. Ecuador said that it could no longer adhere to the OPEC cuts because it has financial pressure and needs to export more. The government said that it would gradually raise output. Ecuador is a small producer and was already not complying fully with its promised cuts so the additional barrels that the South American nation will put onto the market won’t be a game-changer. But the real concern is that overall compliance within the cartel starts to slip.
UAE: Qatar-Saudi crisis could take months. UAE’s foreign minister told Bloomberg that his country is not interested in a quick fix to the standoff between several gulf nations and Qatar. He said that the blockade could last “weeks, months” to come to a resolution. “We want to take away Qatar’s huge, huge support for this extremism and terrorism that we are seeing everywhere,” the minister said.
Ecuador pulls out of OPEC deal. Ecuador said that it could no longer adhere to the OPEC cuts because it has financial pressure and needs to export more. The government said that it would gradually raise output. Ecuador is a small producer and was already not complying fully with its promised cuts so the additional barrels that the South American nation will put onto the market won’t be a game-changer. But the real concern is that overall compliance within the cartel starts to slip.
UAE: Qatar-Saudi crisis could take months. UAE’s foreign minister told Bloomberg that his country is not interested in a quick fix to the standoff between several gulf nations and Qatar. He said that the blockade could last “weeks, months” to come to a resolution. “We want to take away Qatar’s huge, huge support for this extremism and terrorism that we are seeing everywhere,” the minister said.