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LONDON Oct 11 OPEC's deal to cut oil production
is unlikely to result in a substantial reduction in actual
supplies, some of the world's biggest oil trading companies said
on Wednesday, meaning the market is unlikely to rebalance until
well into 2017.
The price of crude oil has stabilised around $50 a barrel
since the Organization of the Petroleum Exporting Countries
agreed the output deal on Sept. 28, but rising production from
Libya and Nigeria -- both members of the producer group -- casts
doubt over the agreement's effectiveness, the heads of trading
firms Gunvor and BB Energy told the Reuters Commodities Summit.
"Clearly, they have put a floor on the market," Gunvor Chief
Executive Torbjorn Tornqvist said.
"But I don't think they can do any substantial cut. There
are too many uncertain factors involved. These two countries
(Libya and Nigeria) can wipe out any other deal that has been
Any agreed reduction will not affect actual supplies until
next year, Tornqvist added, because the next OPEC meeting to set
supply policy, in Vienna on Nov. 30, will be too late to adjust
cargo loading dates before 2017.
"Realistically, they can't do anything till January. We're
going to have quite a lot of oil in the market until then. I
don't have high expectations of sustained higher oil prices,
certainly for the medium term."
'WORK TO DO'
Glencore's head of oil, Alex Beard, was also sceptical that
OPEC's deal is a game changer.
"We need to see the real deal in November rather than the
talk of the idea of doing a deal," he said.
"Libya's production is certainly going up at the moment and
Nigeria is obviously off its lows as well. So I guess my outlook
on the OPEC meeting is they've still got their work to do to
come up with the detail that will convince the market."
Gunvor's Tornqvist said the oil market is unlikely to
rebalance until the middle or second half of 2017, giving a
similar timeframe to that expected by Vitol's chief executive.
Vitol CEO Ian Taylor on Monday said the price of oil in
dollars could reach the high fifties to early sixties if OPEC
and other producers cut supplies by 1 million barrels per day.
"But can they really give us a million between OPEC and
non-OPEC? It's a tough call," he said.
The head of BB Energy, Mohamed Bassatne, told the summit on
Wednesday that he does not expect a rapid rally or an early
rebalancing of supply and demand.
"I do think that the market will probably have found some
kind of bottom between $45 and $50," he said.
"It probably will go higher, but it still needs time to
rebalance ... I don't see it rebalancing until probably second
half of 2017."
(Editing by David Goodman; Follow Reuters Summits on Twitter