Fitch: OPEC deal might not have lasting effect on oil prices

With the OPEC meeting on oil prices just a day away, a ratings agency doubts that, even if a production cut deal is agreed, its ability to have a lasting impact on prices is unclear and will depend on the size of the cuts and the willingness of members to stick to them.

The much-awaited OPEC meeting in Vienna on Wednesday will decide whether OPEC members will cut oil production in an attempt to stabilize the oil market and reduce the oil glut which has haunted the market for over two years.

Fitch Ratings said on Tuesday that high inventories and the potential for US shale production to respond quickly to any market tightening mean that oil prices may flatline in 2017 before gradually moving higher over the next few years.

The credit rating agency added that it expects supply and demand to be broadly balanced in the first half of 2017, with a move to a more pronounced deficit from the second half of next year. But the still-high commercial inventories may delay any significant price response.

As a result, Fitch maintains its base-case assumption that both Brent and WTI will average $45 per barrel in 2017. Furthermore, the agency said that the price would rise to $55 per barrel in 2018 and introduced a 2019 price expectation of $60.

Fitch expects that it may take longer to fully return to the agency’s original long-term equilibrium price assessment of $65 per barrel.

Also, it sees the future path of oil prices as highly uncertain. Unprecedented capex cuts, according to Fitch, could translate into a far sharper fall in output than the consensus expectation, while there is also potential for demand growth to slow if economic growth disappoints or for supply to be higher than expected if US shale comes back strongly as prices rise.

Share this article

Follow Offshore Energy Today

Events>

<< Feb 2019 >>
MTWTFSS
28 29 30 31 1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 1 2 3

19th Annual Arctic Oil & Gas Symposium

CI Energy’s 19th Annual Arctic Oil & Gas Symposium has brought together hundreds…

read more >

Egypt Petroleum Show

This event will feature 500+ regional & international exhibiting companies from over 35 countries…

read more >

INTERNATIONAL PETROLEUM WEEK 2019

International Petroleum (IP) Week is a renowned and respected fixture in the annual calendar…

read more >

Fuel Cell Expo 2019

FC EXPO is world’s largest show for hydrogen & fuel cell…

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply