(New throughout, adds comments on U.S. elections, background on
NEW YORK Oct 5 The surplus in crude oil supply
that has led to a two-year price rout has been eroding since the
second quarter and will be "gone" by the beginning of the second
half of 2017, PIRA Energy Group founder Gary Ross told reporters
A massive glut in oil brought crude prices crashing from the
$100 a barrel range in mid-2014 to as low as about $27 early
Organization of Petroleum Exporting Countries last week
agreed to modest oil output cuts in the first such deal since
2008, limiting production to a range of 32.5 million-33.0
million barrels per day.
Global benchmark Brent crude prices have risen more
than 10 percent in the week since the deal.
The decision by OPEC to embrace production cuts will help
move crude prices toward a target of $50-$60 per barrel, said
Ross, who is now chairman of the consultancy.
OPEC's policy has shifted as Saudi Arabia is targeting that
price range and Iran has become more willing to accept an
agreement, Ross said.
On Wednesday oil prices rose about 2 percent, touching their
highest since June after an unexpected drop in U.S. crude
Speaking at a news conference on the sidelines of PIRA's
executive energy conference, Ross said that U.S. shale producers
were likely to hedge more selectively after OPEC decided to
limit output, whereas previously they looked to lock in future
output close to the $50 a barrel level.
Shale producers and oil-consuming companies were
under-hedged, he said, adding that industrial and airline buying
would support prices.
On the upcoming U.S. presidential election, Ross said, if
Democrat Hillary Clinton wins, the stock market will likely
rally and raise the value of all risk assets, including oil and
"People are going to be relieved that Trump is not there,
because of his uncertain policies," Ross said.
Energy policy has come up only intermittently during the
This is the first time in 20 years that gasoline prices have
not been a major topic of debate during a U.S. presidential
election, said Jim Messina, campaign manager for President
Barack Obama who also spoke at the news conference.
(Reporting by Devika Krishna Kumar and Jessica Resnick-Ault in
New York; Editing by Lisa Von Ahn and Meredith Mazzilli)