Market Insights

October 20, 2016 • Posted in Market Insights

Week of October 10, 2016

 

  • Market reaction to last week’s OPEC production cut agreement and a drop in US crude and distillate stocks drove Brent above $52/bbl and WTI to almost $51/bbl late last week
  • The OPEC agreement would reduce production by around 700,000 bbl/day
  • Details are being worked and final agreement and implementation is expected to take place in November
  • It is unclear whether solidarity among the parties to the agreement will be strong enough to hold given the political, religious and economic differences among them
  • Major oil companies like Shell, ExxonMobil and Phillips66 break even at $50/bbl
  • Most analysts (including IHS) still see 2017 prices averaging around $52/bbl
  • Natural gas moved above $3.00 per MMBtu NYMEX as the market anticipates the approach of winter but mild weather may limit upward movement in the short-term

 

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