Kuwait: it's premature for OPEC to cap Libya, Nigeria oil output

Patrice Gainsbourg
Julho 17, 2017

Oil prices have improved due to reports of a slowdown in the growth of rigs in the U.S., along with strong refinery demand from China.

Ever since production cuts by OPEC and non-OPEC countries, Kuwait pumped 2.72 million barrels a day in June, making it 90 percent compliant with its output quota under the cuts agreement, the International Energy Agency said Thursday in a report.

KPI's parent, Kuwait Petroleum Corp. - the company in charge of the nation's oil production - is considering boosting capacity to 4.75 million barrels a day by 2040, he said.

WTI (CL) oil price has ranged from USD 43 to USD 54 per barrel in the last three months, far from the USD 100 seen in 2014.

USA shale oil producers and The Organization of the Petroleum Exporting Countries (OPEC) met for the first time to talk about the future of the oil industry, according to Forbes and to the Anadolu Agency (AA), a Turkish news source.

India's reliance on Middle East oil imports shrunk in June to the smallest since October 2015 as the world's third-biggest importer tapped other sources amid OPEC supply cuts, ship tracking data from industry sources and data available on Thomson Reuters Eikon showed. If Chinese petroleum demand growth continues to grow at its current rate, the decline in inventories tells me Brent crude could well rise to $54-$56 sometime in November. And, of course, Russian Federation got the better end of the bargain, agreeing to a puny 300,000 bpd reduction-and a gradual one at that-from its record-high October daily production rates, while Saudi Arabia had to shoulder a burden of about half a million bpd.

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Also S&P Global, it said that if the price of oil stays at below $50 per barrels through 2018, it would put oil majors' credit ratings at risk. The revisions have been largely prompted due the fast rebounding shale oil production in the US. Then the oil price slide began-hesitant at first, and then steadier as the months went by.

Last week, oil prices settled higher for the fifth session in a row on Friday, to score a weekly gain of roughly 5% as investors cheered data suggesting that demand for oil will pick up during the second half of 2017. My take? The world is tantalisingly near a short-term bottom in crude oil prices.

On the whole, given the selloff in the recent months, we mentioned last week that some short-covering was on the anvil. Industrial output, which rose 7.6% from the same period a year ago, paced the GDP gains, while an 11% surge in retail sales underscored the strength of the domestic consumer economy.

The bounce in prices could extend in the near term given that most of the bearish triggers have been baked into prices.

Looking ahead, Rs 2,900 is likely to provide immediate support and the short-term bias looks positive above the same.

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