Brent crude traded near the critical $50 resistance level on Wednesday morning on signs that the United States may finally be reducing its crude oil production. At 9:45 a.m. HK/SIN Brent crude was trading flat at $49.61 per barrel and WTI futures were trading at $47.05 per barrel, down 0.02 percent.
In a statement on Tuesday, Fatih Birol, the chief of the International Energy Agency commented that he expects the global oil market to rebalance in the second half of 2017, assuming there are no surprising production increases by any leading producers, including Libya and Nigeria, countries which are currently exempt from OPEC’s production cuts. Oil prices have seen their longest run of gains in the past few weeks, signaling a shift in sentiment after U.S. oil output decreased slightly. OPEC exports rose in June for the second consecutive month, up 1.9 million barrels per day from June of 2016 a report from Thomson Reuters Oil Research showed.
Qatar Shakes Things Up
Qatar announced on Tuesday its plans for a significant increase in the production capabilities of Liquified Natural Gas (LNG) by 30 percent, a move which would threaten other producers, specifically the United States, Australia and Russia. If implemented, Qatar would increase production from 77 million tons per year to 100 million tons of LNG per year within five to seven years.
Last month Qatar was sanctioned by Saudi Arabia, the United Arab Emirates, Egypt and Bahrain due to suspicions that the country was aiding in terrorism and colluding with Iran. Qatari leaders have denied the charges. Kuwait is currently serving as a mediator and global leaders are hoping to find a dialogue-based solution to the problem, with Qatar offering a commitment to fighting the finance of terrorism which they claim they’ve met. Western countries are hoping for a quick resolution to prevent the disruption of the LNG supply chain which could cause serious problems for many nations. Qatar has said that it is ready to meet any “reasonable” demands in order to have the sanctions lifted.