Oil prices expected to slide further as OPEC maintains output

There is global oversupply of 1.5mn to 2mn barrels a day, Iran’s Oil Minister Bijan Namdar Zanganeh said yesterday, before the ministers met.

A report in newsletter Energy Intelligence suggested this week Saudi Arabia might be ready to fine-tune policies and could start pushing for a global deal to curb supply in order to avoid oil prices remaining low for longer.

Crude oil prices rose on Friday as OPEC ministers met in Vienna, while the dollar hovered near one-month lows a day after staging its largest one-day fall in almost seven years.

Asked about the ceiling at the news conference, Mr. Kachikwu and OPEC Secretary General Abdalla Salem el-Badri emphasized that the group would continue at the “current production level”.

Expectations of higher exports and production from Iran next year when sanctions are expected to lifted is one reason why the cartel has not been able to reach an agreement on an output target.

The UAE energy minister Suhail Al Mazrouei said after the meeting that Opec would not work against its customers.

Saudi Arabia had hinted at cuts in output – but only if OPEC and non-OPEC members followed suit. “Nothing has been curtailed”.

Beijing will add 70-90 million barrels of crude to storage tanks in 2016 to build up its strategic petroleum reserves (SPR), according to most respondents in a poll of five analysts and data collected by Reuters analysts.

Guided by its biggest producer Saudi Arabia, OPEC has maintained output to force higher-cost producers to scale back their operations.

“OPEC said it will maintain actual production levels, which is around 31.5mbpd”.

Venezuela is proposing taking 1.5 million barrels a day of production out of the market. By 1330 GMT, the ministerial meeting behind closed doors had been in progress for almost three hours.

“[Opec] agreed that member countries should continue to closely monitor developments in the coming months”, the group said in a statement. At this price all twelve OPEC countries are suffering.

OPEC nations are faced with a massive surplus of oil, sending prices plunging more than 60 percent in the last 1½ years. But in a break from that strategy, OPEC has held production steady since a year ago in a bid to defend-and extend-its share of the oil market. OPEC pumps four-in-10 barrels worldwide. NGL Energy Partners LP was struggling to muster interest on Friday for a new high-yield bond, as investors grow skittish, prompting the issuer to offer higher interest rates, IFR reported. The overproduction is likely to worsen next year as Iran plans to pump an additional 500,000 barrels a day within weeks of global sanctions being lifted.

Indonesia, which left OPEC in 2008, has returned to the group.

USA crude futures were up 55 cents at $41.63.

OPEC’s move on Friday was an affirmation of its decision late previous year to abandon its role as the world’s swing producer of oil, meaning it could regulate its supplies to keep oil prices stable.

That decision upended the oil the market and has seen prices slump by more than 40 per cent to levels last seen in the aftermath of the financial crisis.