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MOSCOW, November 3. /TASS/. The oil market will recover in the second half of 2017 irrespective of measures to be undertaken by the OPEC, UK-based consulting firm Wood Mackenzie told TASS on Thursday.
"Even if a deal is reached between OPEC and non-OPEC production to cut output, the amounts will be within usual seasonal declines during Q4 2016 and H1 2017. Typically Saudi output is lower during these months because its domestic oil demand slides and crude oil exports can remain steady at lower rates of output," said Ann-Louise Hittle, head of macro oils at Wood Mackenzie.
Meanwhile, if OPEC members manage to come to terms on the oil production cut, "it would accelerate the rebalancing of supply and demand during late 2016 and 2017," Hittle said. "There would be a larger implied stock draw in H2 2017, for example, that would support prices above our current expectation for an annual average in 2017 of $55 per barrel for Brent likely towards $60 per barrel annual average," she added.
Wood Mackenzie expects Brent oil prices to average $50.35 per barrel in the fourth quarter of 2016, the expert said. "The latest OPEC effort to gain an agreement on supply cuts has helped support oil prices already. However we expected oil price stabilization in Q4 2016 in any case because of the gradual rebalancing of supply and demand currently underway," Hittle said.
The future oil production freeze deal may be unworkable due to exceptions certain OPEC members demand, Hittle said. "This makes it difficult for the rest of OPEC to take on the burden of the reductions in supply and could leave most of the reductions carried by a few producers such as Saudi Arabia. This could make the deal unworkable," she added.