Vienna (AFP) - OPEC's announcement that it is keeping crude output levels unchanged again, despite a collapse in oil prices, reflects the growing influence of booming US shale but analysts say the cartel is still the dominant player.
A subtle shift may be taking place within OPEC as it heads into its most important meeting in years, according to delegates with the producer group, as the discussion over whether it needs to cut output to defend oil revenues quietly intensifies.
OPEC’s Secretary General Abudulla al-Badri this week urged markets not to panic over the drop in prices to a 4-year low near $81 a barrel, while Kuwait’s oil minister said OPEC was unlikely to cut output when it meets on Nov. 27 in Vienna.
Oil traders should not lose too much sleep worrying about what OPEC, often unpredictable and quarrelsome in the past, will do when it meets next week.
The producer cartel, say delegates who attend meetings, is odds on to leave output policy unchanged. As a risk factor for oil markets, its May 31 gathering in Vienna barely features on traders’ radar.
With the last day of OPEC pre-negotiations almost over, the latest from Vienna is that Iran and Iraq appear to have softened their positions ahead of a crucial OPEC meeting on Wednesday, however as the WSJ reports, "it may not be enough to satisfy Saudi Arabia’s demands for a broad-based oil-production cut."
When OPEC did not cut production last November, the oil market collapsed in shock and awe that the cartel would not just give in and allow non-OPEC members to walk away with market share. Today, in Vienna, "exactly as expected," OPEC once again confirmed production will remasin at 30 million barrels per day in the face of the global oil glut and prices for WTI and Brent have jumped $0.50 to $1.00 (we presume on machines and removal of a worst case boost to production).
OPEC said its production declined to the lowest level since June as bad weather disrupted supplies in Iraq and output weakened in Libya and Nigeria.
The Organization of Petroleum Exporting Countries pumped 30.022 million barrels a day last month, about 138,000 a day less than January, according to the 12-nation group’s monthly market report. It didn’t change forecasts for global oil demand and the amount of crude it will need to produce this year. Low prices may start to crimp U.S. shale output toward the end of the year, it said.