Oil prices will collapse if OPEC does not intervene-Analysts
2022.12.01 09:35
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Oil prices will collapse if OPEC does not intervene-Analysts
Budrigannews.com – At the OPEC meeting on Sunday, it adheres to the latest goal – to reduce oil production to 2 million barrels per day. However, some analysts believe that oil prices may fall if the group does not further reduce production.
According to sources in the group, the fact that OPEC, as well as Russia’s allies, the OPEC group, called OPEC, postponed the planned virtual meeting in Vienna on December 4, indicates that OPEC may retain its policies.
Since October, the group has agreed to reduce production by 2 million barrels per day from the beginning of November to the end of 2023 by 2 million barrels per day. It is obvious that the actual reduction provided by the alliance will be from 1 to 1 million barrels per day due to production restrictions of some participants.
Sources told Reuters that the UN wants to understand how changes in oil prices affect the global market and learn more about the prospects for demand for petroleum products in China, the world’s largest importer, where an unprecedented demonstration is expected to ease restrictions on coronavirus.
However, several analysts do not rule out surprises and warned that due to the current oversupply in the OPEC markets, there may be a risk of a collapse in oil prices in the event of a reduction in production targets at the conference. PVM Oil analyst Stephen Brennock said: “Further production declines cannot be ruled out.
“Without specifying how much lower, according to his expectation, prices will fall, he added: “Failure to comply with the requirement will lead to the beginning of a new sales hype.”
The price on Thursday was about $88 per barrel – a modest recovery from a near one-year low of about $80 per barrel for the week. The price reached a 14-year low above $139 per barrel, after Russia joined Ukraine.
ING analysts called the past weakness the reason “it is impossible to rule out further supply cuts” due to the restrictions imposed on the Chinese economy and the inability of the European Union to agree on the level at which Russian oil prices can be limited. Amrita Sen, co-founder of Energy Aspects, told JB Bank that its OPEC position will not change yet.
To ensure a balance between supply and demand, EnergyAspects assumes that OPEC will return part of the gross barrels to the market in the next two quarters of this year. “According to the UBS analyst, lower oil demand in China, as well as new emissions from the US strategic oil reserve SPR, may provoke the group to further reduce, and uncertainty about supplies from Russia may lead to the cancellation of the OPEC quota.”
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