Friday December 2, 2016
In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
1. OPEC reaches historic deal
(Click to enlarge)
- In a Brexit or Trump-style shock to the markets, OPEC defied expectations with an agreement that actually has some teeth to it. The cartel will cut its collective output from just over 33.6 million barrels per day (mb/d) to 32.5 mb/d.
- Russia will also cut 300,000 barrels per day, although a Russian official said the cuts would take effect gradually. Non-OPEC producers will cut a combined 600,000 barrels per day as part of the agreement.
- The 1.2 mb/d cut from OPEC and the 0.6 mb/d cut from non-OPEC will lead to a global supply deficit as soon as early 2017. There are a lot of inventories that need to be worked through, but if the deal is actually implemented (and there are still question marks surrounding implementation from a group that has notoriously cheated on agreements), inventories will drawdown in earnest next year.
- Oil prices could rise to $60 per barrel in the first half of 2017, analysts say.
- But, investors should be cautious: a quick response from U.S. shale could add 800,000 barrels per day next year, according to Goldman Sachs, enough to kill off the price…