Tighter oil

22 December 2017 By Lauren Silva Laughlin Follow @TheRealLSL

OPEC’s restraint has put a floor under the price of crude, but big oil companies will put a lid on it in 2018. Majors worried about oversupply will tighten budgets and focus on areas with quick payback. U.S. shale will be the big beneficiary, reinforcing its global influence.

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On Nov. 30, the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia agreed to extend oil output cuts until the end of 2018. The cartel also decided to cap the combined output of Nigeria and Libya at 2017 levels of less than 2.8 million barrels a day. Both countries had previously been exempt from production restraints.

By October, commercial inventories in member countries of the Organisation for Economic Co-operation and Development had fallen to a level 140 million barrels above the five-year moving average, draining more than half the previous glut, according to OPEC.

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