Posted on 05/25/2017 7:26:44 PM PDT by Lorianne
OPEC and non-members led by Russia decided on Thursday to extend cuts in oil output by nine months to March 2018 as they battle a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
Oil prices dropped more than 4 percent as the market had been hoping oil producers could reach a last-minute deal to deepen the cuts or extend them further, until mid-2018. [O/R]
OPEC's cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets.
Oil's earlier price decline, which started in 2014, forced Russia and Saudi Arabia to tighten their belts and led to unrest in some producing countries including Venezuela and Nigeria.
The price rise this year has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market's rebalancing with global crude stocks still near record highs.
"We considered various scenarios, from six to nine to 12 months, and we even considered options for a higher cut. But all indications discovered that a nine-month extension is the optimum," Saudi Energy Minister Khalid al-Falih said.
(Excerpt) Read more at reuters.com ...
It is somewhat surprising that our local sand plant is producing record levels of fracking sand. Big jump in train traffic in the last month or so.
Good, the US shale industry could use a 9 month boost.
oil stocks are going down and the market up
$50 per barrel is the new $80 per barrel. Increased economic activity will spur demand as more fracking spurs supply. Now if we just got to the point where we could have a new Arab embargo and produce everything we need.....
Which Clint Eastwood line does it remind you of?
http://www.macrotrends.net/1369/crude-oil-price-history-chart
If oil can hold at or under $50 (and turning loose US production really helps with that), OPEC & Co. have a big problem, with many of their economies dependent on big profit on their oil.
Saudi wisely wants to diversify, but, with $50 oil, do they / will they have the funds to do so?
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