Fitch sees OPEC+ deal prolonged till at least end of 2019

MOSCOW, Jun 17 (PRIME) -- The oil production cut agreement between OPEC and non-OPEC states will be prolonged until at least the end of 2019, but the parameters may change, international rating agency Fitch said in a research note on Monday.

“We expect OPEC+ to continue to manage supply to avoid large supply-demand imbalances. We believe that the OPEC+ deal will be extended until at least the end of this year, though its parameters could change. As a result, we expect the market to stay broadly in balance,” the agency said.

The annual average Brent crude price will remain in line with the existing base-case assumption of U.S. $65 per barrel for 2019, it added.

“In the longer term we assume average prices to moderate to $57.5 per barrel for Brent and $55 per barrel for WTI as OPEC+ policies may become less efficient over time… We expect US upstream companies to remain profitable at these price levels, assuming the current cost base and achieved efficiency gains. We expect production growth in the US to meet most of the additional global demand in the next few years as it does now.”

In November 2016, OPEC and non-OPEC states including Russia first agreed to reduce their oil output to rebalance the market. In December 2018, the participants of the deal decided to cut production by an additional 800,000 barrels per day for OPEC and 400,000 barrels per day for non-OPEC states, including 228,000 barrels per day for Russia, from the level of October 2018.

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