JAKARTA (TheInsiderStories) - Organization of the Petroleum Exporting Countries (OPEC) sees the oil price could reach US$60 per barrel by the end of this year. At the close of trading on Nov. 25, the price of WTI oil contract in January 2017 in the position of $46.06 per barrel, down 3.96 percent. Meanwhile, Brent oil contract in January 2017 at $47.24 per barrel, fell 3.59 on previous trading.
Iranian Oil Minister Bijan Namdar Zanganeh, said OPEC could reach an agreement to limit the supply of crude oil. The plan, the restriction of production decision will be announced after the organizational meeting on 30 November.
He said, Algeria propose cut production by 1.1 million barrels per day for the members of OPEC and declining supply of 600,000 barrels per day for non-OPEC countries. Earlier, OPEC said it would cut production by 700,000 barrels per day to get to 32.5 million - 33 million barrels per day. Russia as the largest producer in the world are planning to participate in the deal.
If OPEC members agree, is optimistic that OPEC crude oil prices until the end of 2016 could reach $60 per barrel, and next year stabilized at around $50 to $55 per barrel.
From the supply side, the current production of oil market dominated by three camps, namely the 14 member countries of OPEC, non-OPEC which includes Russia and Oman, as well as countries that are not in groups like the US and Canada. If the restriction of production done seriously, it must involve all three camps.
In its own internal OPEC, countries that have problems militant attacks such as Iraq, Nigeria, and Libya is not expected to join production cuts. All three require additional funding as a result of stagnant economic performance when the conditions in the country was in disarray.
U.S. investment firm Jefferies Investment Bank report, oil prices have declined over the past two months due to the market’s skepticism about OPEC’s ability to reach agreement on production restrictions Nov.30 meeting in Vienna, Austria. While in the near term, prices are depressed by the strong US dollar, increased supply from Saudi Arabia for the Asian market, and the decline in Chinese imports.
Some traders argue, a stronger dollar over the last decade depress commodity prices. Because the terms of the request would be disrupted as a result of higher prices in other currencies. In addition, there are reports Saudi Arabian oil company, Saudi Aramco will increase the supply to a number of customers in Asia in January 2017.
This sentiment will certainly weigh on the market. Saudi policy to spur exports to Asia came after Russia stole their position as the largest supplier of crude oil to China. On the other hand, production cuts a deal estimated to run in February 2017, so the effect is only felt in the second half of next year.
In a report titled November Monthly Oil Market Report, OPEC predicts total oil demand this year will rise 1.23 million barrels per day to 94.4 million barrels per day. The decline in consumption in Latin America and the Middle East will be offset by an increase of OECD Europe and Asia Pacific.
While in 2017, crude oil demand will increase by 1.15 million barrels per day to get to 95.55 million barrels per day. It is also triggered by the world economic growth to 3.1 percent from 2.9 percent in 2016.
From the supply side, new supply from non-OPEC countries increased by 780,000 barrels per day to 56.2 million barrels per day in 2016 and rose 230,000 barrels to the 56.43 million barrels per day in 2017. OPEC produces 33.64 million barrels per day in October 2016.