The oil price rose on Thursday on reports that Saudi Arabia might be persuaded to cut production in 2016, but there was disagreement among OPEC members and an insistence that output could only be reduced if non-OPEC producers like Russian Federation and Mexico cut output too.
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“By then they have a better feel for Iranian production; how much damage has been done to shale production; and how many offshore and oil sands projects have been delayed or scrapped”, Williams said.
Crude fell as much as 3.6 per cent in NY.
Emmanuel Ibe Kachikwu, left, Nigeria’s oil minister and OPEC president, and OPEC Secretary General Abdullah al-Badri arrive for a news conference after a meeting of OPEC oil ministers in Vienna, Austria, on Friday.
On the New York Mercantile Exchange, January West Texas Intermediate crude dropped $1.11, or 2.7%, to finish at $39.97 a barrel, after touching a $39.60 low.
Saudi Arabia yesterday repeated the kingdom’s stance that it would be willing to cut as long as non-Opec also reduces its output.
“These developments indicate the onset of a more balanced market in 2016, with demand for OPEC crude expected to rise by 1.2 million barrels per day to average 30.8 million barrels per day for the year”, he said.
A few days before the OPEC meeting on Friday, oil prices are once again showing some nervousness with Brent futures slipping and USA crude losing the majority of Monday’s gains.
Ahead of the semi-annual meeting, OPEC’s biggest producer, Saudi Arabia, defied calls to slash output, in hopes of protecting its share of the market. The group has pumped more than its collective target of 30 million barrels a day the past 18 months, data compiled by Bloomberg show.
Iran Oil Minister Bijan Zangeneh said that the members at the meeting may stick with a policy of maintaining output unchecked, which is in line with market expectations.
OPEC expects further cooperation with other influential non-OPEC oil exporters such as Russian Federation and the United States, but added there is no sign to cut global oil output.
“Everyone is watching what OPEC will do, and it is between raising the production quota or staying flat”, says Barnabas Gan, an OCBC commodity analyst, saying either decision means the overhang will continue and prices will remain under pressure.
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While the price weakness has led to thousands of industry job losses, with major firms also scaling back future investment, it has proved good news for consumers and businesses – with falling fuel and other energy costs boosting spending power.
