Saudi Arabia has cut production but oversupply is still there.

   On Friday (January 13th), oil prices in the Asian market were stable and were supported by reports on the details of the reduction of production by the Organization of Petroleum Exporting Countries (OPEC). However, the market is still skeptical about whether oil-producing countries can comply with the target of reducing production, and the oil market is under pressure. Traders said that Saudi Arabia, OPEC's largest crude oil exporter, said its production has dropped to less than 10 million barrels per day, the lowest since February 2015, which has given oil prices some support. This also means that Saudi Arabia's production cuts are greater than the 486,000 barrels/day agreed in the production reduction agreement at the end of last year. However, in the first two weeks of January, the actual reduction of supply has not yet appeared, but OPEC and other OPEC oil producers such as Russia's original production cuts should be effective.

   BNP Paribas said, “The direction of oil prices depends mainly on the compliance of oil producers with the 2016 production reduction agreement.” The bank added: “In OPEC and several non-OPEC oil producers, production will be reduced in the first six months of 2017. After that, the oil market has risen since the end of 2016, and more is based on beliefs rather than facts. Once the market confidence of the oil-producing countries fulfilling their promises declines, it may lead to a significant correction in oil prices.” The bank said it expects US WTI crude oil in 2017. The average price is US$56/barrel, which is US$7 higher than the previous forecast. The average price of Brent crude oil is US$58/barrel, which is US$8 higher than the previous forecast.

   The Dutch bank said in its January outlook report that “the signal of contradiction” would allow oil prices to be restricted in the narrow range in the first half of this year. The bank said: "On the one hand, not everyone is convinced that OPEC and non-OPEC are determined to cut production. This means that if the set target is really achieved, oil prices may rise further. But US shale oil production may continue to increase and OPEC cut production exemption The increase in production in Nigeria and Libya may result in a reduction in production efforts."

   Institution: On the 28th of January, the average daily export of OPEC oil decreased by 110,000 barrels.

   The British consultancy Oil Movements said on Thursday (January 12) that the average annual export of petroleum exports to the Organization of Petroleum Exporting Countries (OPEC), which was not included in Angola and Ecuador, was more than December 31. Reduced by 110,000 barrels in the four weeks.

   According to specific data, as of the end of January 28, OPEC's daily average crude oil export volume was 24.14 million barrels.

In addition, in the Middle East, as of January 28, the average daily seaborne oil exports of non-OPEC countries such as Oman and Yemen decreased by 480,000 barrels to 17.36 million barrels per day.

   OPEC's oil production accounts for more than one-third of the world's total production. On November 30, 2016, the organization agreed to reduce production by about 1.2 million barrels per day from January 2017, and the output fell to 32.5 million barrels per day. At the same time, 11 non-OPEC oil-producing countries led by Russia on December 10 last year reached the first coordinated production reduction agreement with OPEC in 2001. Non-OPEC oil producing countries will reduce production by 558,000 barrels per day from January 2017.

   Fischer's global energy: even if the oil-producing country does not cut the full production of oil prices, it is difficult to fall below 50 dollars

   FIE's Global Energy Consulting (FGE) released a research report on Friday (January 13) saying that even if the oil-producing countries did not fully comply with the previously agreed global production cuts, oil prices would be paid in the range of $50-60 per barrel. cast. On November 30 last year, OPEC agreed to reduce production by about 1.2 million barrels per day from January 2017, and the output fell to 32.5 million barrels per day. At the same time, 11 non-OPEC oil-producing countries led by Russia on December 10 last year reached the first coordinated production reduction agreement with OPEC in 2001. Non-OPEC oil producing countries will reduce production by 558,000 barrels per day from January 2017.

   As the world's largest oil exporter, Saudi Arabia's current production has fallen to a 22-month low of less than 10 million barrels per day. Saudi Arabia promised to cut production by 486,000 barrels per day to 100.58 million barrels per day. At the same time, according to the Kuwait and Algerian oil ministers, the two countries have also exceeded their production reduction targets. Fischer Global Energy said Saudi Arabia, Kuwait and the United Arab Emirates may cut production by 750,000 barrels per day, while the actual production cuts of OPEC oil producers in these three countries are expected to be between 150,000 and 200,000 barrels per day.

   In addition, the agency also expects non-OPEC oil producers to cut production by 300,000-400,000 barrels per day, and the vast majority are naturally declining. On the other hand, this exemption to cut production of two OPEC oil producing countries - Libya and Nigeria - may increase by 200,000-500,000 barrels / day.

   Fischer Global Energy pointed out that “finally, the actual production cuts of oil-producing countries may only be about half of the promised, but the acceleration of crude oil demand will help balance oil prices.” It is expected that global crude oil demand will increase by 1.5 million barrels per day in 2017.

   The agency believes that even if the oil-producing countries do not fully comply with the agreement to reduce production, there is still a reasonable opportunity for oil prices to remain stable in 2017. OPEC may be concerned that once Brent crude oil breaks through $60 a barrel, it may stimulate a significant increase in new shale oil and tight oil production.

   According to the research report, in the oil price range of 50-60 US dollars per barrel, the annual growth rate of tight oil production may be 300,000-400,000 barrels per day.

   In summary, Fischer Global Energy believes that supply cuts and increased demand will be sufficient to balance oil prices, especially in the second half of 2017. Oil prices may remain trading between $50 and $60 a barrel.

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