OPEC Enters Meeting That Could Set Direction of Oil Prices
Officials from major oil-producing nations are expected to agree this week to boost output, but just how much they will open the spigot — and the effect on oil prices — remain wild cards.
Ministers from the Organization of the Petroleum Exporting Countries and non-OPEC nations led by
Analysts expect the group will consider an increase of somewhere around 1 million barrels a day. That may seem insignificant in a global supply of 98 million barrels a day, but critically it would reverse reductions that the same countries approved in late 2016, helping push crude higher by more than 50 percent.
Benchmark
The
Any production increase would help offset a decline in output by
Oil demand has been rising faster than expected, pushing prices higher despite a big increase in
Some analysts believe that
There are other considerations than dollars and rubles.
“This is not going to be a decision just based on market analysis and supply and demand,” said Daniel Yergin, the vice chairman of research firm
Yergin said
Other energy ministers, such as
If OPEC members and
“If the volume of spare capacity goes down then the market gets much more vulnerable to supply shocks,” said Essner, the Nasdaq analyst. “A host of geopolitical events around the world could really stoke prices higher.”
Essner is betting that the
Phil Flynn, an oil analyst with The Price Futures Group, expects a deal for around an extra 1 million barrels a day. And he thinks prices will rise anyway.
“The market is going to say, ‘That isn’t enough,’ and ‘How quickly is it going to come online?’ That’s when we’re really going to resume the price increases,” Flynn said. He expects $80 crude by year end, $100 by 2020.
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