OPEC in the News Again

OPEC in the News Again – A Deal to Make a Deal

Algeria hosted a meeting last week of the OPEC producers. To the surprise of many they managed to reach a deal, that some are calling – A Deal-to-Make-a-Deal. The cartel agreed to cut production in the future by some 700,000 barrels per day to a production band of between 32.5 million bpd and 33 million bpd.

Oilpatch Desperately Needs a Boost Up

With a collective breath of relief the energy sector sighed as it needs a price improvement. Calgary's unemployment rate is near nine per cent. CEO Brian Schmidt, of Tamarack Valley Energy, a junior oil player, anticipates this time of year to be a time of reckoning for many in the industry. Companies who have been lucky or smart enough to have pre-sold or hedged their production will see those hedges run their term. 

But - More Cuts Could Come

According to local Ennahar TV News, Algerian Energy Minister, Nouredine Bouterfa, says, "OPEC members may find that the oil market needs more cuts. We will evaluate the market in Vienna by the end of November and if 700,000 barrels are not enough, we will go up."

OPEC’s Track Record Leaves Many Guessing

As reported by Reuters, now, OPEC is unified and speaks in one voice and this makes everything much easier. "If we need to cut by 1 percent, we will cut by 1 percent." Bouterfa told Ennahar TV. However, OPEC has a reputation for not sticking firmly to its decisions. Therefore, the market is still guessing whether a specific deal will be hammered out in November.

Service Sector Decimated

Mark Salkeld, the president of the Petroleum Services Association of Canada, explains that before the crash two years ago, the association had 235 members representing 60,000 employees and it now has 165 companies with 30,000 workers. Since the sector drills and services wells, it is always the hardest hit in a downturn.

Salkeld said his industry's best hope is in new pipelines. He stated, "Our hope is to get pipelines built, because for the services sector, that's jobs well beyond the pipelines being built, it's the job needed to keep those full with oil and gas."

Christopher Ashby
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