OPEC struggles to find deal on curbing oil supply glut

“We are Opec and it is not rational to hold our decision subject to the reaction of the non-Opec producers”, he told reporters upon arriving in Vienna. Production outside OPEC, including in the USA, has remained high this year, and many OPEC members say that prices won’t improve if OPEC cuts production alone.

“There can’t be any agreement because non-OPEC players won’t cut”, said Tamas Varga of brokerage PVM. January Brent crude LCOF6, +1.93% on London’s ICE Futures exchange rose $0.78, or 1.8%, to $43.27 a barrel. Iran has called on the group to trim production to accommodate its own output increase next year.

USA crude oil prices extended gains on Friday, buoyed by a weaker dollar, ahead a closely watched OPEC meeting that is unlikely to alter the group’s policy of maintaining high output.

In spite of the oil price bumping around its lowest in almost seven years and the finances of OPEC members creaking under the strain, Saudi Arabia has shown no signs of backing down without support from other producers, and analysts said the new details did not suggest any weakening in its resolve. Production of crude and gas condensate averaged 10.779 million barrels a day during the month, according to data from the Energy Ministry’s CDU-TEK unit, an increase of 1.3 percent from a year earlier.

Saudi Arabia, which has so far resisted any intervention to prop up oil prices, will propose the Organization of the Petroleum Exporting Countries (OPEC) cut output by 1 million barrels per day (bpd) next year, Energy Intelligence reported, citing a senior OPEC delegate.

In August, Indonesia pumped 910,000 barrels of oil per day.

Iraq, Iran and Russian Federation, meanwhile, would appear to have torched any remote hopes of a cut being agreed at Friday’s OPEC meeting by rejecting the idea that they would reduce or limit output, as the mooted Saudi plan would require. As a result oil prices more than halved in the past 18 months, causing large budget shortfalls across most energy rich nations.

The report, viewed by many as a kite-flying exercise to gauge the resolve of the main players, failed to convince traders that the Saudis will ditch their oil output policy soon. If we look back 30 years, there was a battle for market share, and Saudi lost market share. not going to make the same mistake twice.

Oil prices have plunged in the past year amid a global glut of crude.

According to a survey by Bloomberg, OPEC production in November rose to 32.1 million barrels per day – more than 2.0 million about its target.

A 4-percent rise in heating oil HOc1 prices, which have been depressed in recent days due to warmer-than-expected weather in the North Eastern United States, also contributed to the climb in US crude prices.

Its return is seen as a way for the resource-rich country to access cheaper oil supplies as local demand soars while domestic production falls.