Fitch: OPEC deal will lead to faster market rebalancing
Yesterday’s OPEC deal on output cut of 1.2 million barrels of oil per day and the possibility of a similar agreement with non-OPEC countries is expected to speed up market rebalancing, Fitch Ratings said on Thursday. The agreement should also increase the chances of quicker recovery of oil prices.
The release adds that despite positive effects, the risks of implementation will continue to exist. The most important of those risks are OPEC’s “adherence to the agreement and the willingness of other participants, notably Russia, to co-operate fully.”
The oil cartel finalized the long-awaited output cut agreement in Vienna yesterday. For the first time in almost eight years the organization's members agreed to cut oil output by 1.2 million barrels per day to 32.5 million barrels per day.
Fitch Ratings concluded that the “OPEC commitment alone could end market oversupply” and should lead to decrease in OECD oil stocks throughout 2017. The agency’s view on long-term oil prices hasn’t changed after the deal as they still believe they are more driven by the marginal cost of supply.