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YEREVAN. – OPEC countries are likely to stick to their output cuts beyond their original deadline of March 2018, according to Wood Mackenzie, one of the largest global commodity consultancies.

An increased production and supply could drag prices down. This could also bring about a strong implied stock build of crude and products, which will result in 2018 crude oil prices being significantly below current levels, Mr. Alan Gelder, Wood Mackenzie's Vice President of Research, told Armenia News – NEWS.am.

Stocks are actually being built up: according to the International Energy Agency (IEA), total industry stocks in OECD countries were 3.021 billion barrels in June. They descended very slightly (by 19 mb), but are still 219 mb above the five-year average.

Wood Mackenzie anticipates the global stock to fall modestly for the rest of 2017. But it is the U.S. tight oil which may disrupt the OPEC agreement.

Current prices, and over the last year Brent has mostly been trading within a range of $50-57 a barrel, and WTI between $46 and $53, are still comfortable for American tight oil exports. Their resilience to the price slump of 2014-16 was remarked by OPEC in its World Oil Outlook in October 2016.

“Productivity gains and cost reductions have helped producers maintain output at higher levels than expected and thus delay the slowdown“, the report says.

Wood Mackenzie expects US tight oil output to grow in 2018 to cover almost all the anticipated global oil demand growth of around 1.3 million barrels per day. According to the International Energy Agency, non-OPEC countries are expected to expand output by 1.4 mb/day in 2018, of which 1.0 mb/d is expected to be delivered by the U.S. In this environment, OPEC is expected to extend production cuts to stop a further price drop from happening, Mr Gelder concluded.

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