OPEC agrees for Production Cut

OPEC members have agreed to cut crude oil production. This is the first such agreement since 2008 and it will help narrow the demand-supply gap faster than expected. OPEC has decided to cut production by 1.2 million barrels per day to bring their production down to 32.5 million.  For the first time in 15 years, Russia has agreed to participate in cutting production and has announced a cut of 300,000 barrels per day. The International Energy Agency (IEA) had warned that oil stockpiles, which are already at record levels, would expand for a third consecutive year in 2017 unless OPEC cut production. As per the IEA’s estimates, they were at 300 million barrels of oil, enough to fill 150 supertankers. Most of the oil inventory is presently stored in these floating supertankers. The OPEC cut is also positive for US oil & gas producers as we may have $50 as a near-term floor for crude oil prices.
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