Market will not react positively to OPEC cuts: JP Morgan
Azerbaijan, Baku, March 6 / Trend A.Badalova/
JP Morgan doubts cuts in OPEC output will impact the market positively.
OPEC will meet in Vienna on March 15 to discuss oil cuts. Experts are confident that the organization will cut output for the fourth time since September 2008 to stabilize prices.
However, Iranian Oil Minister Gholam Hossein Nozari said OPEC does not plan to cut output at the meeting. At the last meeting in December 2008, OPEC decided to cut output to 4.2 million barrels per day.
"The only reason for OPEC to announce a further cut is to head off future arguments over market shares or try to provide psychological support to the market," JP Morgan said.
It could actually be argued that the market could respond more positively to a no-change outcome as it would reflect the view that OPEC has done enough, the analysts said.
"Conversely, further cuts would suggest that the producer group continues to see weak demand," JP Mordan added.
JP Morgan forecasts world oil demand at 84.3 million barrels per day, which is 1.6 million barrels less than the 2008 figure.
The prices on WTI will average $43.25 per barrel and price on Brent $43.75 per barrel in 2009.
Oil prices, which increased 13 percent within one week, dropped again on March 5.
The WTI April futures fell $1.77 and reached $43.61 per barrel on New York exchange.
Brent April futures fell $2.48 and reached $43.64 per barrel on the London exchange.
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