Oil prices strengthened slightly after Iraq’s oil minister said OPEC would likely need to extend supply cut deal
After fluctuating in trading on Monday, oil prices fell slightly after the International Energy Agency forecast an increase in US shale production and a decrease in European demand for refined product.
Iraq’s oil minister helped bolster oil prices by saying he believed the OPEC supply cut deal would likely need to be extended into the second half of 2017.
The IEA reported that US shale production may grow by 1.4 million b/d by 2022, with prices about $60 per barrel. The report added more than 3 million b/d of capacity growth could be generated if oil prices rose to $80/barrel.
The report also suggested there would be a drop in demand for European refined products.
US West Texas Intermediate crude fell 26 cents a barrel to $53.07 by 11:56 a.m. Brent crude was down to $55.80, down 10 cents.
Bloomberg reported that Iraqi oil minister Jabbar Al-Luaibi said the OPEC production cuts would likely have to be extended into the second half of 2017. Bloomberg added that Iraq will join such an agreement.
In an interview with Reuters, Gene McGillian, head of market research at Tradition Energy said “I think that has stopped some of the selling pressure that we opened with.”
Despite that optimism, McGillian said the OPEC supply cuts have not yet cut into the oil supply gut substantially.
“The idea that we can extend it would be supportive in the medium term,” said McGillian. He added that similar statements from Saudi Arabia would be needed to push the price substantially higher, he said.
