OPEC Convinces Investors That Its Oil Production Cuts Are Real

[WhiteTara]

Source: Bloomberg

Money managers are the most optimistic on West Texas Intermediate oil prices in at least a decade as the Organization of Petroleum Exporting Countries and other producers reduce crude output. Saudi Arabia has said more than 80 percent of the targeted reduction of 1.8 million barrels has been implemented. Oil shipments from OPEC are plunging this month, according to tanker-tracker Petro-Logistics SA.

"All the signs are pointing to a pretty significant OPEC cut," Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. "Until this week we were only getting data from the producers, now the tanker traffic seems to be supporting this view."

OPEC will reduce supply by 900,000 barrels a day in January, the first month of the accord’s implementation, said the Geneva-based Petro-Logistics. That’s about 75 percent of the cut that the producer group agreed to make. Eleven non-members led by Russia are to curb their output in support.

Hedge funds boosted their net-long position, or the difference between bets on a price increase and wagers on a decline, by 6.1 percent in the week ended Jan. 24, U.S. Commodity Futures Trading Commission data show. WTI rose 1.3 percent to $53.18 a barrel in the report week before settling at $53.17 Jan. 27 on the New York Mercantile Exchange.

OPEC members Saudi Arabia, Kuwait and Algeria have said they’ve cut output this month by even more than was required, while Russia said it’s curbing production faster than was agreed. Saudi Arabia Energy Minister Khalid Al-Falih said on Jan. 22 that adherence has been so good that OPEC probably won’t need to extend the accord when it expires in the middle of the year.

The OPEC-engineered price rally has spurred a surge in drilling in the U.S. shale patch. Rigs targeting crude in the U.S. rose by 15 to 566 last week, the highest since November 2015, according to Baker Hughes Inc.



Read more: https://www.bloomberg.com/news/articles/2017-01-30/opec-convinces-investors-that-its-oil-production-cuts-are-real

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Thanks Trump. You own this one too.

[tenorly]

1. Trump certainly does own this one.

When he called Putin and asked him what he could do for him, the first thing was no doubt "lift the sanctions."

The second was "arm-twist the Saudis to force oil prices up."

"You got it, boss!"