Crude oil prices have dipped significantly as well, finally breaking through the $40-per-barrel barrier in the wake of the Fed’s Beige Book release. Such a cut would be conditional on the participation of non-OPEC producers including Russia, Mexico and Kazakhstan and wouldn’t be agreed on Friday, according to the report.
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West Texas Intermediate oil futures extended losses on Wednesday, after data showed that oil supplies in the US rose for the tenth consecutive week last week.
“While oil advanced (Friday)… there is really nothing much to cheer about”, said Bernard Aw, market strategist at IG Markets in Singapore.
The Iranian oil minister said that OPEC needs to decrease its production to help boost the prices but emphasized that the Organization first needs to create a strong consensus among member states over this.
“In order for there to be a cut in production, non-OPEC (exporters)must participate, Iraq has to participate, and the Iran output picture has to be clear”, a senior OPEC delegate told the Financial Times.
The Energy Information Administration said the US commercial stockpiles of crude oil, gasoline, diesel and other fuels last week soared above 1.309 billion barrels, a fresh record.
The combined effect of lower American oil and gas production now, and less development of oil sands and deep water in the future, means that Saudi Arabia has, in about a year, nearly completely protected their market share which stood at 9.6 mbd in early 2014.
“OPEC’s poorer members like Algeria, Nigeria, Venezuela, they’ve been making these increasingly desperate calls for production cuts to try to get the price back up”, he says.
Markets expect the Organization of the Petroleum Exporting Countries – whose dozen members together pump out more than one-third of the world’s oil – to leave its daily oil output ceiling at 30 million barrels, although it may increase this to reflect Indonesia’s return to the cartel after a six-year absence. But as I have already said, no player is going to cut down on production.
At the very least, each side in the dispute over market-share versus per barrel price will want to look the other in the eye to gauge resolve.
Smaller nations are expected to put further pressure on Saudi Arabia to reduce oil production levels later today when cartel members meeting in Vienna.
“Most importantly the Iraqis need to be involved, and they have to see evidence in the USA and the Russian production is at a peak of 10.7, 10.8 million barrels a day”. He said he hopes the extra output will be accommodated within OPEC’s formal ceiling of 30 million barrels a day. Shell’s decision alone to cancel its Cameron Creek oil sands project in Alberta will prevent about 80,000 barrels per day from coming to market.
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As the world’s oil producers gather in Vienna, they are all hurting due to prices that crashed a year ago and are hovering at a little over $40 a barrel.
