But don’t forget that Novak has repeatedly ruled out coordinated action on supply, saying “artificial” cuts would not provide a sustainable solution to the oil glut. Oil price increase is on the cards but it still seems a distant reality for now and this can have a negative impact on crude exchanges.
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But with those rivals proving resilient and prices falling to new lows, members including Iran have decided the effort was a failure and are preparing to press Saudi Arabia directly to pull back on production at the group’s meeting this week.
Few traders and investors expect any material change to OPEC’s production policy when the Organization of the Petroleum Exporting Countries convenes in Vienna on Friday.
“There are a lot of divisions, with countries with much lower capital reserves saying, ‘We’re burning through deficit spending too much, we can’t keep this up, ‘” Guith said. Analysts will be combing through both events (http://www.marketwatch.com/story/november-jobs-report-likely-to-give-fed-go-ahead-to-raise-interest-rates-2015-11-29) for hints on the future direction of the USA interest rates and the strength of the greenback. Iran unveiled a new model of oil contracts Saturday aimed at attracting foreign investment once sanctions are lifted under a landmark nuclear deal reached earlier this year, and said US companies would be welcome to participate.
Silver was down 1.2 per cent at $US14.08 an ounce, platinum was down 1.9 per cent at $US834.25, not far off a seven-year low hit earlier in the week.
Poorer members of OPEC such as Nigeria and Venezuela will continue to call for cuts in OPEC’s production target of 30 million barrels a day but not the affluent producers led by Saudi Arabia, which still produce at high levels despite low prices. “But the Saudis aren’t there yet”. “In the USA alone, projected US crude oil production is expected to decline by 500,000 barrels per day to average 8.8 million barrels per day in 2016”, says Mike Ciccarelli, stock and commodities trader at Chicago-based Briefing.com. With this sort of thing in the back of their minds, Gulf countries became reluctant to mark time on production rates while the rest of the world, especially the U.S., expanded production vigorously.
Most analysts do not expect OPEC to cut production, but they are mindful that Saudi Arabia could be inching towards the idea of working on price support measures with other oil producers. The figure is up 10 per cent or 279 million barrels from a year ago.
Investors who produced more than planned amounts received no compensation for the additional barrels.
Also of importance is how Russian Federation produces oil. Among them: projections by the International Energy Agency of slower growth in world oil demand; forecasts of warmer weather this winter; and record oil inventories.
Saudi Arabia is caught between its quest to maintain market share and not being able to spend as it has in the past because of the price of oil.
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The Venezuelan oil minister, Eulogio Del Pino, warned that the market could dip to the $20s if Opec does nothing at this week’s meeting. He is a former host of the TV program Platts Energy Week.
