OPEC expected to extend output cuts amid global headwinds

Faced with slowing global economic growth and with abundant stocks putting pressure on oil prices, the OPEC group of oil producers and its partners are set to maintain production cuts when they meet in Vienna on Thursday and Friday.

The cuts of 1.2 million barrels per day from October 2018 levels were originally fixed in December last

year and were already extended at OPEC's last meeting in June.

They are currently due to remain in effect until March 2020 and could be extended "until June, the date of the next summit," says Tomas Varga, analyst at PVM.

According to Andy Lipow from Lipow Oil Associates the cuts could even be drawn out "until the end of 2020".

OPEC's Economic Commission Board -- which is a strong indicator of the bloc's direction -- said last week that maintaining cuts into 2020 would lead to a "balanced" market.

The organisation's members may well be tempted to follow a cautious course by a forbidding global economic context.

The trade war with the US is acting as a drag on growth in China, normally an avid consumer of oil, while the European economy is also currently stagnating.

Moreover, the output of oil producers outside OPEC is breaking records: the US has been the world's biggest producer since 2018, Brazil and Canada have also increased output and others such as Norway are planning to do so.

According to the latest official estimates from the US, the country's total domestic stocks now stand at an enormous 452 million barrels.

Analysts say that taken together these factors will leave OPEC little room for manoeuvre if it wants to fulfil its stated aim of securing "fair and stable prices for petroleum producers".

 

OPEC expected to extend output cuts amid global headwinds

Faced with slowing global economic growth and with abundant stocks putting pressure on oil prices, the OPEC group of oil producers and its partners are set to maintain production cuts when they meet in Vienna on Thursday and Friday. The cuts of 1.2 million barrels per day from October 2018 levels were originally fixed in December last year and were already extended at OPECs last meeting in June. They are currently due to remain in effect until March 2020 and could be extended until June, the date of the next summit, says Tomas Varga, analyst at PVM. According to Andy Lipow from Lipow Oil Associates the cuts could even be drawn out until the end of 2020. OPECs Economic Commission Board -- which is a strong indicator of the blocs direction -- said last week that maintaining cuts into 2020 would lead to a balanced market. The organisations members may well be tempted to follow a cautious course by a forbidding global economic context. The trade war with the US is acting as a drag on growth in China, normally an avid consumer of oil, while the European economy is also currently stagnating. Moreover, the output of oil producers outside OPEC is breaking records: the US has been the worlds biggest producer since 2018, Brazil and Canada have also increased output and others such as Norway are planning to do so. According to the latest official estimates from the US, the countrys total domestic stocks now stand at an enormous 452 million barrels. Analysts say that taken together these factors will leave OPEC little room for manoeuvre if it wants to fulfil its stated aim of securing fair and stable prices for petroleum producers.