Saudi Arabia expressed confidence Thursday that oil prices will keep recovering, cementing expectations that a divided OPEC will decide to keep crude gushing at its meeting in Vienna.
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One thing which could perhaps smooth the waters would be the appointment Thursday of a new OPEC secretary general to replace Libyan Abdalla El-Badri. “We will be very gentle in our approach and make sure we don’t shock the market in any way”, its new energy minister, Khalid al-Falih told reporters.
A total daily deficit record of the crude oil production in Nigeria has now hit 1.01 million per barrels which now puts revenue losses to N10.1 billion ($50.5 million) daily amidst sustained attacks by terrorist group, Niger Delta Avengers.
Iranian Oil Minister Bijan Zanganeh yesterday rejected suggestions OPEC would agree on a general cap in the Austrian capital, saying his country backed a return to a national quota system.
West Texas Intermediate for July delivery fell as much 29 cents to $48.72 a barrel on the New York Mercantile Exchange and was at $48.88 at 11:38 a.m. Tokyo time.
“Obviously there are several major events that the market is going to focus on and could cause a bumpy ride for stocks today”, said Peter Cardillo, chief market economist at First Standard Financial in NY.
But in the most recent drop, which has seen oil tumble from over $100 in 2014 to close to $25 in January, OPEC – driven by kingpin Saudi Arabia – has changed tack.
Qatar’s energy minister expressed confidence that the rebalancing in the market has put a bottom beneath the price of oil, which has almost doubled from $26 a barrel in mid-February to $50 a barrel last week.
“We don’t care about oil prices – $30 or $70, they are all the same to us”, Prince Salman said in an interview with Bloomberg published in April.
For decades, the 13-member oil cartel was able to essentially dictate what the world pays for oil because its members controlled so much supply – four out of every 10 barrels of oil consumed every day around the world now come from an OPEC nation.
The final statement Thursday mirrored the communique at the last OPEC meeting in December in not even mentioning an output target. However, it doesn’t include several of the world’s biggest producers – Russia, Canada, China and the United States among the countries that are not members.
Most analysts had expected no consensus to emerge from the OPEC meeting in Vienna today. As a result, crude prices crashed to $27 (24 euros) per barrel in January – their lowest in over a decade.
Global oil demand is expected to rise by 1.2 million barrels per day this year, down from a 1.5 million barrel-per-day increase in 2015, OPEC projected.
“It is evident that these developments point to a more balanced market in the second half of this year”, Mohammed bin Salah Al-Sada, Qatar’s energy minister, said in a speech before the decision was announced.
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Analysts said that prices were not moving drastically due to cautiousness, adding that Iran’s opposition to any attempt to limit output to support weak crude prices has not surprised traders.
