29.09.2016 - The growth potential of oil prices after OPEC decision is limited
The price of oil today, slightly corrected after a strong growth in the previous trading session, which was caused by the unexpected decision of OPEC to reduce oil production to 32,5-33,0 million barrels per day. It is worth noting that the OPEC countries have reached a preliminary agreement and the final decision will be confirmed at a formal meeting of OPEC countries in November. According to our estimates, the volatility of oil prices will remain elevated until this meeting due to speculation about the question what country and in what volumes will reduce production from its current level of 32.24 million barrels per day. On the other hand, such a solution will probably enhance drilling activities in the USA, which will increase the volume of production in the country. Our medium-term outlook for oil remains negative with the targets at 40 and 35 dollars per barrel.