OPEC May Need to Deepen Cuts on Demand, US Production: Mercuria

OPEC may need to deepen production cuts amid high US oil production and sluggish demand growth, Mercuria CEO Marco Dunand said on the sidelines in Davos.

• In the environment of slower demand growth, OPEC needs to show very good compliance with agreed supply cuts, Dunand said.
• "The Saudis might need to go further with production cuts if they want to control the price," he added.
• "US oil production growth was underestimated over the past year. But it will probably slow down because of huge industry consolidation and cost reduction," Dunand said.
• "High US production growth works well when Chinese demand is growing by 1mbpd. But both Chinese and overall global demand are slowing and will probably grow by 1.5mbpd this year," Dunand said.
• The bearish sentiment in crude oil markets is also supported by the lack of any material impact on oil production and trade from the ongoing tensions in the Middle East and shipping attacks in the Red Sea, he added.