The market is open for next week’s OPEC countries meeting. The meeting will consider increasing the deadline for the reduction in crude producer production. Experts agree that the deadline may increase in the meeting. If this happens, then the prices of crude prices will be seen. Although there is no decision on production, sharp decline in crude is possible.
Oil production cuts may increase timing
The direction of crude prices will be decided by the meeting of the oil producing nations to be held on May 25. It is believed that OPEC countries could increase the time limit for production cuts in the meeting. On Monday, Russia and Saudi Arabia announced that they would support the proposal to increase the oil production cut deadline by March 2018. On Tuesday, Iraq also talked about reducing the deadline for oil production. The Prime Minister of Iraq said that his country is in favor of reducing the supply of oil in the global market. According to him, Iraq will support OPEC’s proposal to increase the deadline for oil production cuts. At the same time last week, the Iraqi oil minister had said the extension of deadline for production reduction would be 6 months. The meeting to be held on May 25 will include 11 non-opaque crude producers along with OPEC countries, including Russia.
US crude producer eye on Hurricane season
According to Ajay Kedia, Director of Kedia Commodity, America’s Hurricane Season will also set prices for the OPEC meeting. According to Ajay Kedia, if category 3 of Hurricane is expected this year, then the oil rig in the US can see a sharp decline in production. This can lead to an increase in prices. During the Hariken Season, rig maintenance is also closed for the season. According to a report by Energy Advisor BTU Analytics, the production falls to 10-12 per cent compared to the previous month when Hurricane arrives. In most cases, recovery has been found in the production. However, on the arrival of large hurricanes like Katrina or Rita, the production has seen long lasting effects. Ajay said that if this category has a Hurricane of Category 3, then crude supply will be affected.
Prices can reach level 54
According to Ajay Kedia, the signs are currently on the rise in crude prices. If the oil-producing countries continue to cut down, in the US, the impact of the hurricane season can be seen, then crude can reach level of 54. According to him, considering the past performance of crude prices, any increase in the above can be based on demand. That is, crude will cross 54 levels only if these signs will increase the demand for crude in the global market. However, Ajay conjectured that there could be a decline in crude if there was no decision on the cut in production. At the same time, in the US, Normal Hurricane season, crude prices can fall to $ 44.
Which companies will benefit
According to Vivek Mittal, the research head of VM Financial, if growth is seen in crude, then oil exploration companies and drilling companies are expected to benefit. The same oil companies are expected to get an inventory gain in such a situation when the prices of crude prices show sharp bounce. According to Vivek, ONGC, Reliance will benefit from the rise in crude prices. At the same time, due to the merger of Cairn, the rise in crude in Vedanta stock will also benefit. Along with this, the drilling company Abon Offshore can also get an edge.