OPEC, for some quiet moments..

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When OPEC and Russia meet this weekend to gauge progress on their oil-supply deal, they’ll be trying to dispel the shadow of previous unfulfilled promises. Oil prices rose 20% in the month after OPEC agreed to cut output, reaching $54.06/bbl in New York on Dec. 28. Since then, they’ve slipped almost 5% as traders, with one eye on rising U.S. shale production, await proof that OPEC and other producers will live up to their deal. They recall how Russia broke its pledge during cutbacks in 2008, while some members of the producers group failed to fully implement the agreement.

OPEC seeks to quiet doubts on supply cuts as rally falters

Demand from some of the most coveted oil buyers may slow this year because they didn’t purchase all that they could in 2016. While China’s private refiners have received their first batch of quotas to buy foreign crude in 2017 and may get approval to purchase more later, the amount probably won’t exceed 2016 volumes, according to JPMorgan Chase & Co. That’s because the government is cutting allocations for those who bought less last year. What the processors have been allowed to directly import in the latest tranche is 62% of 2016’s total levels, the bank said in a report.

Oil demand at risk as China reins in buyers that bought less

And the U.S. producers are already doing it, recent figures and deals show. They survived thirty-dollar oil, and are emerging leaner, more efficient, and able to respond more quickly to oil price fluctuations. They proved they were and are “more resilient to low oil prices than many analysts had anticipated,” as the EIA said as early as in August last year. Meanwhile, Saudi Arabia seems unfazed from this possible rebound in U.S. shale, judging from one of the latest comments by its Oil Minister Khalid al-Falih. The Saudis still believe (or at least al-Falih says so) that current oil prices at around $50 are still not enough to herald a significant rebound of US shale production.

Saudi Oil Minister Shrugs At U.S. Shale Recovery | OilPrice.com

The basic laws of supply and demand can easily cause the OPEC production cuts to not work, but there are other factors to also consider. These factors include U.S. shale production, political stability returning to Libya and Nigeria, the amount of oil sitting in storage and rising role of renewable energy.

The Math Doesn’t Add Up For The OPEC Deal To Work | OilPrice.com