OPEC Needs to Keep Production Lower than Agreed Target Through 2019

Oil producer cartel OPEC and its partners will need to keep production lower than their agreed target through 2019 for benchmark Brent crude to come back to $70 a barrel. oil and gas consultancy Rystad Energy said.

Last week. the Organisation of the Petroleum Exporting Countries and its Russia-led allies agreed to slash oil production by a bigger-than-expected 1.2 million barrels per day (bpd).

The producer group needs to stay 700.000 bpd below its agreed target of 31.8 million bpd through 2019 in order to bring a recovery in benchmark Brent crude prices to the $70 per barrel level. Rystad analyst Bjornar Tonhaugen said in a note.

“The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices.“ Tonhaugen said.

Crude prices have see-sawed of late on worries of a global economic slowdown on one hand. and a boost from production cuts on the other.

Brent crude futures. currently trading at just over $61 a barrel. have lost nearly a third of their value since reaching a four-year high of $86.74 in early October.

 

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