The oil market will recover in the second half of 2017 irrespective of
measures to be undertaken by the OPEC, UK-based consulting firm Wood Mackenzie
told TASS on Thursday.
"Even if a deal is reached between OPEC and non-OPEC production to cut
output, the amounts will be within usual seasonal declines during Q4 2016 and
H1 2017. Typically Saudi output is lower during these months because its
domestic oil demand slides and crude oil exports can remain steady at lower
rates of output," said Ann-Louise Hittle, head of macro oils at Wood
Mackenzie.
Meanwhile, if OPEC members manage to come to terms on the oil production
cut, "it would accelerate the rebalancing of supply and demand during late
2016 and 2017," Hittle said. "There would be a larger implied stock
draw in H2 2017, for example, that would support prices above our current
expectation for an annual average in 2017 of $55 per barrel for Brent likely
towards $60 per barrel annual average," she added.
Wood Mackenzie expects Brent oil prices to average $50.35 per barrel in the
fourth quarter of 2016, the expert said. "The latest OPEC effort to gain
an agreement on supply cuts has helped support oil prices already. However we
expected oil price stabilization in Q4 2016 in any case because of the gradual
rebalancing of supply and demand currently underway," Hittle said.
The future oil production freeze deal may be unworkable due to exceptions
certain OPEC members demand, Hittle said. "This makes it difficult for the
rest of OPEC to take on the burden of the reductions in supply and could leave
most of the reductions carried by a few producers such as Saudi Arabia. This
could make the deal unworkable," she added.
(ITAR-TASS)