Daily Management Review

Iraq is going to increase production by 50%. How will the market react?


10/31/2017


Iraq is getting ready to increase oil production by 50%. This was stated by the Director-General of Basra Oil Company Abdul Jabbar. The company is responsible for mining in the southern part of the country.



pixabay
pixabay
Jabbar noted that Iraq can now increase production to 5 million barrels per day, and up to 6 million barrels - in the future two years. This became possible thanks to development of deposits in the south of the country. By the way, if we add these figures to amount of extraction in Kurdistan, the total production can reach 6.5 million barrels.

Now Iraq produces 4.5 million barrels a day, of which half a million barrels falls on Kurdistan.

It is also worth noting that Iraq is the worst performer in terms of limiting production in the framework of the OPEC + deal: only 31%.

Strictly speaking, Iraq initially did not want to participate in the agreement, as it is waging war on terrorists, and this requires additional financial resources.

However, despite everything, oil prices are one the rise and have peaked since mid-2015. A barrel of the Brent blend now costs more than $ 60. However, the sustainability of this growth is in question.

The problem is positioning of participants in the futures market. The fact is that hedge funds and other players have never been so optimistic.

Their net long position in the five main contracts (Brent, WTI, RBOB, HO) is now a record 1.189 billion barrels. When everyone makes a one-way bet, the market cannot continue to grow: usually a reversal occurs.

The situation is fueled by analysts, who are constantly raising their forecasts. It is enough to look at the chart of forecasts of prices for WTI:

At the end of the summer, when OPEC and the International Energy Agency (IEA) began to report a stronger than expected global increase in oil demand and an accelerated rate of decline in inventories, market sentiment began to change.

In addition, as 2018 and the OPEC meeting, scheduled for November 30, are approaching, we can hear increasingly more announcements that the deal will be extended until the end of next year. In any case, representatives of Russia and Saudi Arabia spoke about this.

In addition, some investment banks expect that the production of crude oil in the US in 2018 will be worse than forecasts, which will help remove surplus oil from the market. Slowing in the shale sector is already observed, although it is still unclear how the producing companies behave in the conditions of higher prices, which we see now.

source: zerohedge.com






Science & Technology

Tech giants face stricter government regulation in the US

Nestle's Head: Veggie meat is new megatrend

Huawei may introduce Android replacement in August

Are US high-tech investors causing brain drain in Europe?

'Russia's Google' Yandex Was Hacked By Western Intelligence For Spying: Reuters

Reuters: Chinese hackers were stealing data from IT giants for years

China's first solar power molten salt plant sets record

WSJ announces imminent start of Boeing 737 MAX flight tests

Study: Machine learning is five times more harmful for the environment than a car

Would Singapore Be The First One To Bring Lab Grown Shrimps To The Global Market?

World Politics

World & Politics

China launches anti-dumping investigation into U.S. propanol

France announces new tax for air fares

Europe Concerned Over Iran Move To Breach Uranium Enrichment Cap

Singapore To Build ‘$296 Million’ Smart Next-Gen Army Training Centre

No More Sales Of E-Cigarettes In San Francisco?

US ‘Hell-Bent On Hostile Acts’ Even After Trump-Kim Agreement, Says North Korea

Italy avoids EU sanctions for high national debt

Trump allocates 4.6 bln to help migrants