Kuwait – Mubasher: Failure to reach an agreement amid the worst supply glut in years would have sent oil prices down to the level of $40 per barrel, and possibly lower, the National Bank of Kuwait (NBK) reported.
The bank added that the full compliance of OPEC and non-OPEC sides will lead to erasing the global supply glut, which accounts for 0.7 million barrel per day (mb/d) in the fourth quarter of 2016.
OPEC agreement in November helped US shale to recover; drilling rigs increased to 477 on 2 December, with a 51% rise, from 316 rigs in May. Crude production also levelled up to 8.69 mb/d, with a 3% increase from its low this year, the report said.
Oil prices went up 9% on 30 November, after OPEC agreed to cut its production by 1.2 mb/d to 32.5 mb/d for a period of 6 months, starting in January 2017, so that the members will be required to reduce output by 4.5% from October’s reference production level.
Russia along with non-OPEC producers agreed on reducing oil output by 0.6 mb/d, while Iran agreed to cap its own output at a level 0.2 mb/d, short of its own aforementioned target of 4.0 mb/d. Iran will be allowed to raise supplies by a further 90,000 b/d until it reaches its new level, NBK noted.
