Price Retreat Connected With Global Oil Supplies Surplus - Source
Source close to OPEC said Monday that the retreat in oil prices would continue if the global supplies maintained its surplus. The source, preferring anonymity, told KUNA that the supplies increase at the world markets was attributed to OPEC and other major producers lack of agreement on decreasing production further down from the agreed upon 1.8 million barrels per day.
The boost in Shale oil production also played part in the price decrease. OPEC's exclusion of Nigeria and Libya from the deal to decrease production had its ill impact on efforts to decrease the global surplus, the source noted. OPEC, which contributes around 31 million bpd of the global production, is eager to bring down its reserves from 3 billion barrels to 2.7 billion barrels in the upcoming five years.
The international organization also failed in extending the previously agreed upon production decrease until 2018.The source said that global politics also played part in the decrease, revealing that US President Donald Trump's intensions to sell half of the US oil reserve did not bode well with OPEC's efforts to maintain the oil price.
The source indicated that to decrease global supplies without harming the interest of consumers, OPEC and global producers must find a way to bring production down to 2.5 million bpd. OPEC and other major producers agreed last December to decrease production to 1.8 million bpd in the first half of 2017, a step which a positive impact on the price.