Azerbaijan, Baku, March 13 / Trend , A.Badalova/
The OPEC meeting to discuss the possible decrease of production will not have a positive result on oil prices.
The next OPEC meeting will be held in Vienna on March 15. Iranian Petroleum Minister Gholam Hossein Nozari said that OPEC does not have plans to make public the decision on reduction of oil production.
British consulting company on economic studies Capital Economics senior economist Julian Jessop said that OPEC unlikely to succeed in pumping up the oil price.
There is a consensus yet among the cartel members to anticipate another cut
"However, even if OPEC does cut quotas by the 500,000 barrels per day that some expect, the impact on prices should be limited," Jessop said.
The greater issue is the weakness on the demand side.
The U.S. State Energy Agency (USAID) reports the world oil demand in 2009 will fall by 1.4 million barrel per day and hit 84.27 million barrels.
Further production cuts that simply keep pace with weakening demand might put a floor under prices but they are not going to trigger a strong recovery.
OPEC made a decision to cut oil production by 4.2 million barrels per day at its latest meeting in December 2008. The next possible production cuts will be the fourth since September 2008.
Many key producers seeing their economies slow sharply and possibly heading for outright recession, Jessop said.
"Regardless of the outcome of OPEC meeting, we are sticking with our longheld view that the oil price (Brent crude) averages around $40 per barrel (pb), Jessop said.
Prices might start to pick up again in 2010 as the global economic outlook eventually improves, but equally they might fall further in the near-term as the recession drags on.
JPMorgan members do not believe in OPEC efficiency.
According to analysts, OPEC may take a decision to cut production in order to give a physiological support to the market. However, this step will not have a positive impact on the market.
The further production cuts mans that producer countries still wait for low oil demands, the report said. Key OPEC members will not want to over-tighten the market and squeeze consumers while the rest of the world is trying to stimulate their economies. If Saudi Arabia is signaling no more cuts, and demand is seasonally weakening, the implication is that prices will fall.
The oil prices upped in expectation of the next meeting of OPEC. As a result of auction on the New York Stock Exchange the cost of April futures on WTI have increased by $4.7 up to $47.03 pb. The cost of April oil futures on Brent on the London Stock Exchange upped by $3.69 up to $45.09 per barrel.
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