{"id":7427,"date":"2017-01-30T15:50:49","date_gmt":"2017-01-30T21:50:49","guid":{"rendered":"http:\/\/nrgibroker.com\/?p=7427"},"modified":"2017-01-30T15:50:49","modified_gmt":"2017-01-30T21:50:49","slug":"opec-convinces-investors-that-its-oil-output-cuts-are-real","status":"publish","type":"post","link":"https:\/\/nrgibroker.com\/en\/opec-convinces-investors-that-its-oil-output-cuts-are-real\/","title":{"rendered":"OPEC Convinces Investors That Its Oil Output Cuts Are Real"},"content":{"rendered":"

OPEC appears to have persuaded investors that it\u2019s making good on promised production cuts.<\/span><\/h4>\n

Money managers are the most optimistic on West Texas Intermediate oil prices\u00a0in at least a decade as the Organization of Petroleum Exporting Countries and other producers reduce crude output.\u00a0Saudi Arabia has said more than 80 percent of the targeted reduction of 1.8 million barrels a day has been implemented. Oil shipments from OPEC are plunging this month, according to tanker-tracker Petro-Logistics SA<\/a>.<\/span><\/h4>\n

\u201cAll the signs are pointing to a pretty significant OPEC cut,\u201d Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. \u201cUntil this week we were only getting data from the producers, now the tanker traffic seems to be supporting\u00a0this view.\u201d<\/span><\/h4>\n

OPEC will reduce supply by 900,000 barrels a day in January, the first month of the accord\u2019s implementation, said the Geneva-based\u00a0Petro-Logistics. That\u2019s about 75 percent of the cut that the producer group agreed to make. Eleven non-members led by Russia are to curb their output in support.<\/span><\/h4>\n

Hedge funds boosted their net-long position, or the difference between bets on a price increase and wagers on a decline, by 6.1 percent in the week ended Jan. 24, U.S. Commodity Futures Trading Commission data show.\u00a0WTI\u00a0rose 1.3 percent to $53.18 a barrel in the report week. The U.S. benchmark slipped 1.1 percent to $52.57 at 10:52 a.m.<\/span><\/h4>\n

OPEC members Saudi Arabia, Kuwait and Algeria have said they\u2019ve cut output this month by even more than was required, while Russia said it\u2019s also curbing production faster than was agreed. Saudi Energy Minister Khalid Al-Falih said Jan. 22 that adherence has been so good that OPEC probably won\u2019t need to extend the accord when it expires in the middle of the year.<\/span><\/h4>\n

Shale Headwind<\/span><\/h4>\n

The OPEC-engineered price rally has spurred a surge in drilling in the U.S. shale patch. Rigs targeting crude in the U.S. rose by 15 to 566 last week, the highest since November 2015, according to Baker Hughes Inc.<\/span><\/h4>\n

\u201cThere\u2019s one headwind in the oil market: increased U.S. shale production,\u201d Jay Hatfield, a New York-based portfolio manager of the InfraCap MLP exchange-traded fund with $175 million in assets, said by telephone. \u201cU.S. output in 2017 will be 1 million barrels a day higher than last year.\u201d<\/span><\/h4>\n

U.S. crude production climbed to 8.96 million barrels a day in the week ended Jan. 20, the highest since April, according to the Energy Information Administration. That\u2019s already closing in on the EIA\u2019s latest 2017 output forecast of 9 million barrels a day that was issued Jan. 10.<\/span><\/h4>\n

The net-long position in WTI rose by 21,429 futures and options to 370,939, the most in data going back to 2006. Longs rose 3.7 percent to a record high, while shorts slipped 11 percent.<\/span><\/h4>\n

In the Brent market, money managers reduced the net-long position by 3.1 percent to 448,352 during the week, according to data from ICE Futures Europe. Longs slipped, while shorts rose.<\/span><\/h4>\n

In fuel markets,\u00a0net-bullish bets on gasoline fell 3.4 percent to 61,511 contracts as futures decreased 1.5 percent in the report week. Money managers increased wagers on higher ultra-low sulfur diesel prices by 1.3 percent to 34,978 contracts, while futures slid 0.4 percent.<\/span><\/h4>\n

\u201cFor the time being the market is more focused on the OPEC cuts than about how fast U.S. shale drillers are returning,\u201d Wittner said. \u201cThere may come a point soon when the support provided by OPEC will be outweighed by the prospect of rising U.S. production. When that happens there will be a big shift in investor sentiment.\u201d<\/span><\/h4>\n

 <\/p>\n

\"opec\"<\/a><\/p>\n

 <\/p>\n

Copyright: Bloomberg<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

OPEC appears to have persuaded investors that it\u2019s making good on promised production cuts. Money managers are the most optimistic on West Texas Intermediate oil prices\u00a0in at least a decade as the Organization of Petroleum Exporting Countries and other producers reduce crude output.\u00a0Saudi Arabia has said more than 80 percent of the targeted reduction of […]<\/p>\n","protected":false},"author":1,"featured_media":5772,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1017],"tags":[1293,300,1294,852,438],"class_list":["post-7427","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-oil-cuts","tag-opec","tag-opec-cut","tag-west-texas","tag-wti"],"_links":{"self":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/7427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/comments?post=7427"}],"version-history":[{"count":0,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/7427\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media\/5772"}],"wp:attachment":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media?parent=7427"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/categories?post=7427"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/tags?post=7427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}