Oil remains weak after OPEC-led output cut extension falls below expectations
Oil markets remained weak on Friday after tumbling in the previous session when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs.At Thursday's meeting in Vienna, the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018. The initial agreement would have expired in June this year. oil plunged 5 percent following the announcement, and held its losses early on Friday.Brent crude futures LCOc1 were trading at $51.47 per barrel at 0125 GMT, up just 1 cent from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were back below $50, at $48.88, down 2 cents from their previous close.
"Some market participants may have expected either a deeper cut, a longer one, inclusion of more countries, or other such icing on the cake,"
Other analysts, including at Goldman Sachs (NYSE:GS) and Jefferies bank said a normalization of oil inventories would occur in early 2018.Analysts also said that the OPEC-led production cuts would support a further rise in U.S. output.
U.S. oil production C-OUT-T-EIA has already risen by 10 percent since mid-2016 to over 9.3 million bpd, close to the output of top producers Russia and Saudi Arabia."The growth in U.S. production is indeed daunting for the oil bull case," Jefferies said.Goldman Sachs warned that the biggest risk to oil markets was what would happen next year, at the end of the OPEC-led production cut.With U.S. output rising steadily and OPEC and its allies potentially ramping up production in 2018 to regain lost market share, many traders are already expect another price slump.
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