The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Meanwhile The Week reports that a growing number of analysts and market observers have begun tentatively calling the bottom of the market for oil.
International benchmark Brent crude has now spent more than seven days above $35 a barrel – and been above $36 a barrel all of this week. Reuters notes it is up nearly a quarter since hitting a low of around $27 a barrel on 11 February while its US counterpart, West Texas Intermediate, is up around a third over the same period.
The positivity has come on the back of hopes for a deal to halt increases in global output, which has the backing of a number of major exporting countries including Russia and Saudi Arabia, the two biggest producers.
“The market has suddenly started to focus on bullish headlines. This has created huge inflows, buying from hedge funds,” said Oystein Berentsen, the managing director of crude at Strong Petroleum.
Robert Yawger, the director of the futures division at Mizuho Securities USA, told the Wall Street Journal: “The market seems willing to shrug off bearish developments and push the upside.”
However, not everyone is convinced. “We continue to remain wary of possible rallies,” said Daniel Ang of brokerage Phillip Futures.
This bearish view is based on doubts that the deal to freeze production at January levels will sufficiently ease global oversupply, which is currently running at one to two million barrels a day. Russia’s output in January reached record high of 10.9 million barrels, while Saudi Arabia was also pumping more than ten million barrels a day and output from the wider Opec cartel was at multi-year highs.
Nor does the agreement have the backing of Iran, which is attempting to add at least one million barrels a day to its exports since emerging from international sanctions.
Added to this is the rapid advance in US shale, which was the trigger that set the current turf war in train. Surprisingly, producers in this high-cost sector have found efficiencies few thought possible and output remains well above nine million barrels a day.