OPEC to mop up on oil; non-OPEC supply falls

He said any impact on policy from the return of Indonesia to the Organization of the Petroleum Exporting Countries (OPEC) would be determined at the group’s next meeting.

“The rebound in oil prices can largely be explained by an improvement in sentiment toward demand and mounting evidence of cuts in non-OPEC supply”, said Julian Jessop, head of commodities research at Capital Economics.

OPEC now projects negative non-OPEC global oil production growth in 2016.

Perhaps more surprising is that OPEC now calls for non-OPEC global supply in 2016 to decline by 130,000 bpd.

Given a lackluster tone in the USA stock market and thin trading due to the Columbus Day holiday, futures were ripe for a modest setback, said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Lower prices are also expected to lift appetite for oil.

Over the last seven days, benchmark Brent crude has risen from $48.06, peaking at $54.05 on Friday and trading at $52.948 Monday morning.

OPEC’s decision to keep its output target at 30 million barrels a day is the “ideal solution” to rebalance the market and support prices, Kuwait Oil Minister Ali Al-Omair said at the conference.

Traders are also waiting on earnings from USA oil companies, which are expected to show big declines because of low oil prices.

“This should reduce the excess supply in the market… resulting in more balanced oil market fundamentals”, OPEC said.

Badri on Sunday confirmed the meeting would take place at an expert level and that OPEC and non-OPEC producers will attend.

“Market confidence is up because we are hearing the same message from everywhere that market is rebalancing”, said Barnabas Gan, an Oversea-Chinese Banking Corp.

OPEC had declared its estimates on Monday that requirement for its oil in 2016 could be a lot greater than believed before, since its technique of letting prices drop reaches US shale oil supplies.

Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on easing expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower. “We see the prospect of another 12 months of rising inventories as an ongoing downside risk for prices”.