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27 Nov 2014
OPEC output cut likely – BNP Paribas
FXStreet (Mumbai) - In an interview with Bloomberg TV, Global head of Commodity Markets Strategy and Senior Oil Market Strategists, Harry Tchilinguirian, said he expects the Oil and Petroleum Exporting Countries (OPEC) group to announce a cut in the output today.
He further added that the group risks losing its role as a swing producer if it does not announce an output cut. Moreover, a theory has been prevailing in the markets that the OPEC would not cut the output which would crowd out a few shale producers in the US. However Mr. Tchilinguirian, feels the OPEC is likely to be more concerned about losing its status of a swing producer rather than crowding out Shale producers in the US since the US is still not allowed to export Crude.
A swing producer is the one who is able to increase or decrease the commodity supply at minimal additional internal cost, and thus able to influence prices and provide downside protection in the short to middle term.
He further added that the group risks losing its role as a swing producer if it does not announce an output cut. Moreover, a theory has been prevailing in the markets that the OPEC would not cut the output which would crowd out a few shale producers in the US. However Mr. Tchilinguirian, feels the OPEC is likely to be more concerned about losing its status of a swing producer rather than crowding out Shale producers in the US since the US is still not allowed to export Crude.
A swing producer is the one who is able to increase or decrease the commodity supply at minimal additional internal cost, and thus able to influence prices and provide downside protection in the short to middle term.