The OPEC-led decision to extend a production cut to March 2018 disappointed financial investors, prompting an exit from oil futures markets, while refiners in Asia were mostly concerned with whether it meant they would need to go hunting for crude.
In Vienna, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers on Thursday extended a pledge to cut 1.8 million barrels per day (bpd) of output until the end of the first quarter of 2018.
Financial traders did not like what they heard, thinking it meant an ongoing oil glut. “The market voted with its feet”, investment bank Jefferies said, dragging crude futures down 5 percent to near $50 a barrel.
In physical markets, however, where tankers can take weeks or months to deliver up to $100 million in crude oil, refiners want to know if they will be forced to search for new suppliers.
“This is a declaration of a strong will of OPEC as well as non-OPEC producers to tighten overall supply-demand,” said Yasushi Kimura, president of the Petroleum Association of Japan, and chairman of petroleum conglomerate JXTG Holdings.
To ensure crude supplies, “we need to carefully monitor OPEC’s production cut adherence,” Kimura said. Read More…