Saudi Arabia Not Likely to Back Down in OPEC Meeting Friday

According to Richard Mallinson, geopolitical analyst at Energy Aspects, “We’re not expecting any change in OPEC’s headline policy”. The movement today is largely being attributed to investors hoping for a sigh of relief from OPEC, which would come if it decides to lower its production rates and support prices. They are considering their options because there is a growing discontent in the kingdom about the low oil price, said an oil official from a Persian Gulf country. Its new approach is a long-term strategy created to force out supplies from non-OPEC producers thought to need higher prices to keep pumping, such as those getting crude from deepwater projects and oil sands. “While analysts disagree on the timing and amount, there will certainly be hundreds of thousands of additional barrels of Iranian crude exports hitting the market sometime next year”. “Consequently, the low oil prices are actually desirable for OPEC at present”, added Commerzbank. It would equate to Saudi Arabia saying: “sorry guys, the weak oil price is really killing our budget and we got it completely wrong – market forces don’t drive the oil price anymore”. Stories that Saudi Arabia is now open to moving forward with some type of agreement with other major producers is hype.

As for the next OPEC meeting, it seems it may be the lull before a storm in June, when the oil ministers will gather again, or something like that. There is less investment from America’s major oil companies and a substantial volume of the shale producer’s rugs have been shut down. Baker Hughes data shows the rig count is around a third of what it was a year ago. The bank expects stocks to draw down next year and crude to average US$60/barrel.

Opec’s national representatives – officials representing the 12 member-countries – plus officials from Opec’s Vienna secretariat – met to discuss the market.

The end of the U.S. Thanksgiving holiday period will also mean a return to the market of U.S.-based investors, a factor that will likely increase trading volatility later on Monday, Global Risk Management’s Poulsen said.

Oil once sold for more than $100 a barrel, with experts predicting it would continue to go up and up.

What was decidedly changing through the weeks was the USA dollar’s strength, as the market priced in a U.S. rate increase, which lent further downward pressure to oil prices.

The oil market is well and truly saturated. Iran is expected to re-enter the market after sanctions are lifted next year, which would contribute to the global oil glut and keep prices slumping.

The YTD performance of the ETF stands at -78.55% and the current imbalance in the crude oil industry is expected to reach a balance soon.

OPEC oil ministers have repeatedly said they would only cut production in tandem with non-OPEC. Back then, OPEC’s production was roughly the same as it is now. The chance of that happening now looks slim.

Exports from Iraq’s north by the Kurdistan Regional Government via Ceyhan in Turkey have edged lower, while those by Iraq’s State Oil Marketing Organisation have remained zero for a second month, the survey found.