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SÃO PAULO – After a 30% fall in oil prices in November, the worst month in 10 years, OPEC (Organization of Petroleum Exporting Countries) and allied countries, led by Russia, in Vienna on Thursday (6) and Friday (7) to try to reach an agreement on the crisis of the sector.
Rising oil production in the United States, Russia, and OPEC member countries has led to an increase in world stocks, as demand for this product has slowed around the world. resulted in an overabundance of supply and price meltdown.
Faced with this, investor expectations are high with the decisions that will be made at the meeting. A group of OPEC economists, who reviewed the scenarios of the meeting, recommended a total reduction in production of 1.3 million barrels per day from October levels, said sources related to Dow Jones.
For Credit Suisse badysts, OPEC should clearly let the market know that it plans to reduce production by about 1.5 million barrels a day in order to recover the recent losses. of oil prices. This reduction would be enough to rebalance the market in 2019.
"The level of stocks has increased considerably in the second half of 2018 and production is estimated to be around 31.5 million barrels / month. 32.9 million October, which could have a significant impact on the price of the commodity, "says Credit Suisse in a report sent to customers.
Saudi Arabia is determined to cut production, but Credit Suisse notes three facts that could leave this expected decision less peaceful than it seems.
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First, Credit stresses President Donald Trump's desire to keep commodity prices down, which could influence the decision of the Saudis, especially given the country's intention to get closer to the United States. after the badbadination of journalist Jamal Khashoggi, critic of the Saudi government disappeared after entering the Turkish consulate in the country.
The second point concerns recent changes in the OPEC production rules, which have been accompanied by changes in production. Russia. The Russian and Saudi governments met in the G-20 and signed a cooperation agreement to "manage" the oil market in 2019.
The third point on which credit is focused is However, according to Credit, a reduction of 1.5 million barrels per day seems likely only in a scenario where Saudi Arabia badumes the reduction of production by country of one country. Load, bringing production to 10 million barrels a day, up from 11 million barrels in November.
It should be noted that Saudi Oil Minister Khalid al-Falih is lobbying. OPEC members, as well as Russia, want more countries to join. The minister privately warned that prices should fall further in 2019 in the absence of any action, according to people related to the issue.
Price effects
If the expected reduction of 1.5 million barrels / day ends, Credit Suisse believes that the price of the product will not be automatically reduced. a barrel of oil is expected to exceed $ 60 per barrel, resulting in another year of growth in US production. This scenario would force OPEC to reduce its production by 2019.
"If they do not reach an agreement, the WTI [petróleo do tipo] should drop below 50 dollars a barrel and trigger immediate cuts in US crude oil, "say Credit Suisse badysts.
Bradesco BBI badysts estimate that a reduction of one meter would allow the oil price rebound to reach nearly 70 dollars a barrel.
Even with the efforts of the OPEC to find a common goal, it should be noted that there are other very important factors for set the direction of oil prices. After all, according to Bloomberg, the actions (or tweets) of Presidents Donald Trump (United States) and Vladimir Putin (Russia) and Crown Prince Mohammed Bin Salman (Saudi Arabia) are of particular importance to the market.
The United States, Russia and Saudi Arabia dominate the world supply and, as such, produce more oil than the 15 members of OPEC. The three countries record record production rates and each of them could increase production again next year, although not everyone can do it.
Saudi Arabia and Russia led the effort in June, so that OPEC and their allies lifted the production restrictions in force since the beginning of 2017. They then both increased production to record or near-record levels.
US production surged unexpectedly as companies extracting from the Permian Basin in Texas overcame bottlenecks in oil pipelines to move their oil to the Gulf Coast.
These increases, along with slight reductions in projected growth in demand, and Iranian oil buyers, changed the sentiment of the market, fearing a shortage of supply and fearing an excess in three months.
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The oil stocks of developed countries of the Organization for Economic Co-operation and Development (OECD), down since the beginning of 2017, have increased again, according to the International Atomic Energy Agency. energy
Faced with declining oil prices, Saudi Arabia announced that it would cut its exports by 500,000 barrels a day next month and warned fellow producers that 39, they should eliminate about 1 million barrels per day from October's production levels.
The Russian president does not show much enthusiasm to restrain the production of his country again, but the position of Trump will of course be much more noisy
(with Bloomberg and the state agency)
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