Baku, Azerbaijan, Nov.23
By Leman Zeynalova – Trend:
There is a 60 percent chance of a successful OPEC meeting in Vienna, which will tighten oil markets in 2017, according to the report of the US JP Morgan bank.
The OPEC meeting, which could frame price formation for the entirety of calendar 2017, will be an influence on several other commodities markets in varying degrees as agricultural markets, global and North American natural gas markets, and, to a lesser extent, certain metals markets feel the impact of shifts in oil and oil product prices, according to the report obtained by Trend.
“Assuming OPEC implements the deal we expect to be agreed in late November, oil markets could start to recover in the second quarter of 2017, as tighter supplies and continued demand growth tighten balances,” said the analysts.
If OPEC fails to reach an agreement then JP Morgan expects prices would collapse to between $35-$40 per barrel, depending on extraneous factors such as weather and broader financial market stability.
If the new US administration under Donald Trump prioritizes trade sanctions over stimulus then oil prices will likely end 2017 in the $45-$50 per barrel range as long as OPEC delivers the promised production restraint, according to the report.
“However, the combination of US trade sanctions/weaker growth and the lack of an OPEC agreement risks sending oil prices back to retest the cycle low point as another four quarters of stock builds would weigh significantly on spot crude prices,” said the analysts.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC on Nov.30 in Vienna.
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