“All in all we discussed a more common position regarding how the international market should be organized, and how maleficent the process of oil and gas extraction from shale is as it damages environment enormously”.
Brent crude has collapsed from $115 a barrel in June 2014 due to ample supplies amid a U.S. shale oil boom and a decision by OPEC last November not to cut output.
KEEP IT FLOWING?: Delegates from OPEC will meet June 5 and are expected not to cut production for the rest of this year. They cited the slowing pace in U.S. oil rig declines, which signaled more supply. While there may be resistance at the June 5 conference, all but one of the 34 analysts and traders surveyed by Bloomberg said Opec will maintain its daily production target of 30mn barrels, ratifying the Saudi strategy.
Regardless of recent upshots in oil prices, the million-dollar question remains in which direction the oil prices will go in the future. “And the other thing they’ll be able to point to is that United States production has topped out”.
Brent crude futures advanced 36 per cent from this year’s low on January 13, and traded at $US61.31 a barrel on the London- based ICE Futures Europe exchange at 12:50am AEST on Friday.
The Organization of Petroleum Exporting Countries will be meeting to decide on the group’s production target for the next six months amid a glut that sent prices down about 50 per cent last year.
“This supply glut, primarily of light sweet crudes, needs to ease sizably before the oil market steadies”. While rates since retreated to $64,710, they are still the highest for this time of year since at least Y 2008.
“I do not think that any change will happen at OPEC’s meeting”, a former member of Kuwait’s Supreme Petroleum Council, Musa Maarafi, said.
“While OPEC again is facing continued oversupply, lower oil prices do appear to be having the intended effect of reducing investment by non-OPEC producers”, he said in a note.
“”(Persian) Gulf states will continue to defend their market share and it is their right to do so.
Oil services companies have been hit hard; Hunting Group for instance, said that its Q1 operating profits were some 60% down on a year previously, with some divisions making a loss as clients tightened their purse strings. Nigeria’s authorities have already borrowed more than half the amount budgeted for all of this year because of a “cash-flow crunch”, Finance Minister Ngozi Okonjo-Iweala said on May 5.
“Dramatic cuts in spending and drilling are finally having an impact, so why on earth would Saudi Arabia change course now their strategy is just starting to bear fruit?”
Countries that often urge the group to restrain output will likely refrain from doing so, Seth Kleinman, head of European energy research in London at Citigroup Inc, said in a report.
OPEC comes out of the meeting with the same decision as last November.
In related news, Iran deputy oil min says OPEC unlikely to cut output. Finally, although there are many articles talking about how many OPEC nations need oil prices to be >$100/barrel to pay their bills, when we look at the top oil producers we see that most will just pump as much as possible in a “Prisoner’s Dilemma”. Most definitely yes. Will it make a difference?