2018 Could See The OPEC Deal Collapse

26 Dec 2017   OPEC

The OPEC extension keeps the oil market on track to balancing at some point next year, but if the group overshoots on tightening, OPEC members could begin cheating, potentially leading to an unraveling of the deal. To be sure, there is a great deal of uncertainty over the pace of inventory drawdowns. The IEA predicts a return to rising inventories in the first half of 2018 , a prospect that threatens another downturn in prices. In this scenario, OPEC will struggle to balance the market, and may be forced into yet another extension. Indeed, there are some analysts who see the downside risk as a much greater threat than the upside, and that the oil market should brace for lower prices. But let’s look at the bullish case for a moment. The inventory surplus has dramatically narrowed this year, falling to just a little more than 100 million barrels […]

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