- Title: Oil prices slip as focus shifts to details of OPEC deal
- Date: 29th September 2016
- Summary: LONDON, ENGLAND, UK (SEPTEMBER 29, 2016) (REUTERS) SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "U.S. shale is quietly becoming the elephant in the room when it comes to the oil price. Obviously their longer term goal will be to totally self-sufficient when it comes to energy but it's certainly a factor and many in the oil industry are suspecting that these rather lower oil prices are ones to which we need to become accustom as opposed to the hundred and fifty bucks per barrel we saw at the very very peak."
- Embargoed: 14th October 2016 11:09
- Keywords: OPEC oil economy commodities Brent crude shale US Nymex
- Location: LONDON, ENGLAND, UK, UNKNOWN LOCATIONS AT SEA, TEXAS + DJ BASIN, COLORADO + PENNSYLVANIA + HOUSTON, TEXAS, UNITED STATES
- City: LONDON, ENGLAND, UK, UNKNOWN LOCATIONS AT SEA, TEXAS + DJ BASIN, COLORADO + PENNSYLVANIA + HOUSTON, TEXAS, UNITED STATES
- Country: Various
- Topics: Commodities Markets,Economic Events
- Reuters ID: LVA00451MBN9P
- Aspect Ratio: 16:9
- Story Text:Oil prices slipped on Thursday (September 29) as investors questioned whether an OPEC agreement to curb oil production - the group's first such deal since 2008 - would be enough to rebalance a heavily over-supplied world market.
The Organization of the Petroleum Exporting Countries agreed on Wednesday to cut output to 32.5-33.0 million barrels per day (bpd) from around 33.5 million bpd, estimated by Reuters to be the output level in August.
Oil prices rose sharply on the news and energy shares rallied in early trading on Thursday. The European oil and gas index soared nearly 5 percent, while the pan-European STOXX 600 index was up nearly 3 percent.
But oil prices retreated as scepticism over the deal led to profit taking.
Global benchmark Brent crude oil was down 60 cents a barrel at $48.09 by 0850 GMT, after earlier climbing to a high of $49.09, its strongest since Sept. 9. Brent settled up $2.72 a barrel, or 5.9 percent, on Wednesday (September 28).
U.S. light crude oil was down 30 cents at $46.75 a barrel, after first hitting $47.47, its highest since Sept. 8. WTI rose $2.38, or 5.3 percent, on Wednesday.
U.S. bank Goldman Sachs said it expected the OPEC deal to add $7 to $10 to oil prices in the first half of next year.
But many analysts said they were concerned that too many details had been left unresolved and that the deal could unravel.
"There is an element of some scepticism as to whether these cuts will actually be implemented based on past events. And of course quite apart from that there's the question of those countries which aren't in OPEC and whether they will be getting involved, most notably Russia," said Richard Hunter, Head of Research, Wilson King Investment Management.
How much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
It is not clear when the agreement would come into effect, how compliance with the agreement will be verified, what new individual quotas for countries would be and how long the deal would remain in effect, analysts said.
And a cut in OPEC production might do little to reduce oversupply, given uncertainty about output from Iran, Libya and Nigeria. - Copyright Holder: REUTERS
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