• Producers correspondening hoping for a near recovery in the oil market.


                  The positive reactions to  the OPEC Ministerial Meeting 172 followed by the second mutual meeting with non OPEC countries continued on Thursday, revealing a  wide consensus in producers views on mechanisms and efforts to restore balance in the oil market, That producers agree on long-term cooperation will revive hopes of market recovery.
    A report by the Organization of the Petroleum Exporting Countries (OPEC) on the results of the two meetings - that the producer countries outside the organization and members of the Convention alphabetically are: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, the Russian Federation, Sudan and South Sudan, who immediately supported the decision of OPEC to continue cooperation between The oil exporting countries for permanent stability in the oil market, represented by the extension of production adjustments for nine months as of July 1, 2017.
    The report noted that the 14 member states of OPEC and its 10 non OPEC producers agreed swiftly and profoundly on the importance of continuing efforts to help support stability in the oil market for the benefit of all producers and consumers of oil.
    The report said that the last meeting was keen to thank all participating countries, both in OPEC and abroad, for their commitment to reductions as indicated in the stated levels of conformity, which are unprecedented levels and surprising and exceeded the agreed quotas.
    The report noted that participants at the meeting emphasized their broad commitment at both the individual and collective levels to maintain the same level of commitment over the next nine months and to continue to adjust production levels more voluntarily and more effectively.
    The report pointed that the ministers of the producing countries expressed their appreciation for the valuable contributions of the Joint Five Years Ministerial Committee to observe the production reduction agreement and its technical committee, where they succeeded during the past months in providing the levels of transparency required in the implementation of the decisions and ensure their application in a timely manner and in an equitable manner, Committees will extend their work with the extension of the Convention.
    The report further clarified the agreement between OPEC producers and participating countries to continue to review the cooperation between producers regularly at the technical and ministerial levels, and agreed to further enhance joint cooperation, including facilitating exchange of views and joint analyzes with a view to ensuring sustainable oil market growth to meet the aspirations and interests of Producers, consumers, industry and the international economy.
    For its part, the Platts Oil Information Agency said that the decision to extend the new production cuts for the next nine months comes within the framework of the movement of "OPEC" and a number of major producers to support the oil market and improve the level of oil prices after realizing the magnitude of negative effects in the past years in the market and shrinking projects The new oil, where they agreed on the need to return the flow of investment at a good level.
    "International oil projects fell to $ 433 billion in 2016, compared with $ 700 billion in 2014, a drop of 25 percent a year, according to the International Energy Agency, and projects that produce about six million barrels per day have been delayed or canceled, In OPEC countries or abroad.
    "At the same time, the demand for oil is growing by about 1 million barrels per day every year, while the decline in field production is accelerated by depletion of fields, which will negatively affect the supply and supply of global oil." According to the report, the global dependence on oil shale production in the United States is growing, but logic confirms that even in the most optimistic scenarios will be unable to rock oil and fill the gap between supply and demand in the future.
    The report pointed that OPEC is mainly able to meet the expected shortage of supply more than the rest of the producers because of their productive capacity and high competitiveness, according to calculations of the International Energy Agency, the demand for OPEC crude is expected to jump to record 35.8 million barrels per day by the year 2022 compared to 32.2 million barrels a day in the world.
    The sharp increase in demand would mean that OPEC capacity would shrink to less than 2 percent of global demand in 2022, its lowest level in 14 years, almost half of 2008 levels when oil prices hit record levels .
    The report said that spending projects is the only way for the recovery of the oil industry, pointing to the start of the return of final investment decisions for projects since the end of 2016 and is expected to double this expenditure globally this year.
    The report noted that there is a pressure on costs of at least 30 per cent since the 2014 price crisis. Capital spending has been significantly curtailed, citing high levels of efficiency and cost pressures, leading some US oil producers to arrive at The price of the tie at 50 or 60 dollars per barrel.
    The report pointed to the optimistic expectations of the international banking group Citigroup, which sees opportunities to reduce the gap between supply and demand in the future by allowing more production of projects in the glaciers access to the market.

    Citigroup believes it is necessary to support the growth potential of deep water and oil sands, as well as the importance of technological improvements that enable access to cost pressures and prevent any deflation in the medium term.
    The report stressed that there will be more good news regarding the market balance at the demand level, pointing out that energy efficiency may reduce the relative growth of demand for oil, but demand will grow more and accelerated by the broad economic growth and increase energy consumption, especially in the Central Asia with large population and high population growth rate.
    Regarding the alternatives to oil, the report pointed that there is a state of continuing to increase dependence on natural gas as low carbon fuel in the next decades, which will double the world dependence on liquid hydrocarbons.
    On the other hand, in terms of prices at the end of last week, oil prices recovered to more than 1%, but ended the week a decline of nearly 3% following the decision of OPEC leaders to extend production cuts did not meet the aspirations of some investors.
    According to Reuters, trading was limited after Thursday heavy selling and ahead of a long weekend in the US and UK. Brent crude for the month was up 69 cents, or 1.3 percent, to settle at $ 52.15 a barrel. Hit a session low of $ 50.71 a barrel.
    US WTI crude futures rose 90 cents, or 1.8 percent, to settle at $ 49.80 a barrel after hitting a session low of $ 48.18 a barrel.
    Crude prices fell 5 per cent on Thursday after OPEC  decision, with some market participants expecting deeper production cuts. Over the week, Brent futures fell 2.7 per cent and US crude futures fell 1.1 per cent.
    US energy companies raised the number of oil rigs for the 19th week while encouraging higher crude prices after OPEC decision to extend current producer cuts to raise spending on new drilling activities.
    But the of growth as the overall increase since the beginning of May fell to its lowest level since October due to low oil prices.
    Baker Hughes Energy Services said companies added two oil drilling platforms in the week ending May 26, bringing the total to 722, the highest level since April 2015.
    This is more than double the number of rigs in the same week last year when the number of drilling rigs was only 316, the lowest in more than six years.
    The rise in the number of oil diggers over a 19-week consecutive period is the longest consecutive increase that ended in August 2011, according to data from Baker Hughes back in the 1987.
    Some analysts are predicting that OPEC cuts are likely to have production from the US Rocky Basin, where producers can work at a much lower cost.

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