Opec-shale tug-of-war to boost oil prices

bengaluru — Oil prices are likely to rise this year thanks to supply disruptions and an Opec-led deal to limit production, but doubts over the future of compliance with the multilateral agreement and rising US production could stem the upward momentum, a Reuters poll showed on Thursday.

A survey of 31 economists and analysts polled by Reuters showed Brent crude would average nearly $64 a barrel in 2018, versus $63 forecast in the February survey, but below the $67.18 average for the benchmark so far in 2018.

Brent prices have risen 4 per cent this year, supported by a deal between the Organisation of the Petroleum Exporting Countries and non-Opec producers led by Russia to curb output by about 1.8 million barrels per day through 2018.

The price briefly rose above $70 a barrel this week, supported by tension in the Middle East and declining output in Venezuela, one of the group’s largest producers, where economic crisis has cut production to its lowest in nearly 30

We view it rather unlikely that the Opec will exit already by mid-year Hannes Loacker, Raiffeisen Capital Management

years. A sustained drawdown in US inventories also helped push the price up towards $70, a peak last seen in December 2014.

“We view it rather unlikely that the Opec will exit already by midyear. However, talking about a possible extension of the deal beyond 2018, we are rather sceptical,” Hannes Loacker of Raiffeisen Capital Management said. “We see a big challenge in bringing in Russia once more. Without Russian participation, the will of some other Opec members may also be abating somewhat.”

“Even if Opec compliance with pledged supply remains elevated through the balance of 2018, the explosive growth in US shale oil supply accompanied by growth in crude oil export capacity will likely tip the balance towards lower oil prices in the second half,” BNP Paribas analyst Harry Tchilinguirian said. —