The 168th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) wrapped off on Friday, 4th December, 2015, in Vienna, Austria without yielding any fruitful results.
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As in two previous meetings, however, the group couldn’t overcome a fundamental divide.
“There was some short covering before the announcement in case there was a production cut”.
Saudi Arabia’s oil minister Ali al-Naimi (C) speaks to journalists as he attend the OPEC meeting …
USA benchmark West Texas Intermediate (WTI) for delivery in January was up 28 cents at US$41.36 and Brent crude for January was trading 26 cents higher at US$44.10 at around 0600 GMT.
A final statement was issued with no mention of a new production ceiling, apparently allowing member countries to continue pumping oil at current rates into a market that has been oversupplied. That leaves OPEC output steady at 30 million barrels a day, with actual daily production closer to 31.5 million barrels. Oil prices went down with the announcements, dropping to $39.99 per barrel in the US. The ceiling, which has been set at 30 million barrels a day, has been breached routinely by the group.
“This decision reflects the consensus going into the meeting of OPEC’s policy for prices needing to find a floor to deter new non-OPEC supply projects”, Gareth Lewis-Davies, London-based energy strategist at BNP Paribas SA, said by phone.
OPEC’s decision to keep production at near record levels has done Britain’s oil industry in the North Sea no favours either.
“We are looking for stability in the market”, said Venezuelan minister Eulogio Del Pino.
The OPEC Conference President stated that the conference is centered on enhancing market stability which would benefit all stakeholders and contributes to global economic growth stressing that this can be achieved only through the concerted effort of all stakeholders. The long-term strategy, launched a year ago, has yet to yield real dividends as USA output remains near all-time highs, though some cracks have emerged.
Oil and Gas UK represents 500 oil and gas companies. Consequently, global oil prices have been falling, hitting a six-year low recently. In fact, in 2016, we anticipate a contraction in non- OPEC oil supply.
After Friday’s OPEC decision “everyone does whatever they want”, said Iranian Oil Minister Bijan Namdar Zanganeh. “OPEC has been producing around 31.5mbpd in the past months anyway”, he added.
Acknowledging their inability to push up oil prices, OPEC nations on Friday effectively scrapped their official output ceiling and agreed to keep producing well above that level. “Shale is the new reality”. “Americans don’t have any ceiling, Russians don’t have any ceiling, why should OPEC have a ceiling?”
Crude oil prices resumed their downward spiral as OPEC said it will refrain cutting production. Iran is also in no mood to cut output just as it returns to the market after years of sanctions prevented it from exporting. Crude fell as much as 3.6 percent in NY. “Iran is coming back”. It comes after Russian Federation has been working its way into Saudi Arabia’s once-undisputed market in Asia over the past decade. “And also the production changes from time to time”, he said.
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But the Saudis appear in no mood to act unilaterally.
