Oil price decline eases Asia’s inflation fears as Opec production cuts disappoint
- Oil prices are likely to be range-bround after Opec members agreed on smaller than expected production cuts
- Declining fuel prices have eased consumer-price inflation in Asia, a Morgan Stanley report says
Benchmark Brent crude oil futures were trading at US$82.7 per barrel, down 0.2 per cent in mid-day during Asian trading hours, extending losses of more than 2 per cent on Thursday.
The Organisation of Petroleum Exporting Countries (Opec), along with other oil-producing nations, agreed on Thursday to a voluntary output reduction of 900,000 barrels per day, in addition to extending production cuts of 1.3 million barrels per day.
The cuts are likely to keep supply-demand tightly balanced, analysts said.
Delegates had earlier discussed as much as 2 million barrels per day of new production cuts, which had been pencilled in by traders. Prices are likely to trade between US$80-85 per barrel, analysts said.
Adding to these forecasts, Jean-Christophe Caffet, group chief economist at Coface, a global credit insurer, said that in their “central scenario, where there is no major escalation involving Iran”, oil prices should remain in the US$80-$90 per barrel price range.