By Joseph Rokop
OPEC and non-OPEC members have agreed to cut their total oil production over the course of 2017 to an average of approximately 1.7 million barrels per day (bpd).
Saudi Arabia, the world’s oil kingpin, and has pledged to implement its’ share of the cuts immediately in January and Saudi Arabia’s Gulf Allies are expected to do the same. Non-OPEC countries, such as Russia, will be executing their cuts more gradually over the first half of the year.
Evidence of the production cuts should slowly impact the supply/demand balance going into the second and third quarters which will then be evident in oil's price.
From a demand standpoint, fuel consumption in North America generally increases as the weather warms and we shift into driving season. In addition, Saudi Arabia fuel consumption increases in the summer months as a result of AC usage in the Middle East.