OPEC to stumble into a modest output reduction, ESAI says
Baku, Azerbaijan, Nov. 6
By Aygun Badalova - Trend:
Energy Security Analysis (ESAI), which is the leading US-based independent research firm, believes that OPEC as a whole will stumble into a modest reduction in output that will keep Brent generally near $85 per barrel.
In a report, obtained by Trend, ESAI said that a with slightly lower output by the end of 1Q15, the pressure on prices will drop a bit, allowing Brent to climb back to $90 mark and maybe a bit higher.
But the supply/demand fundamentals will still signal a 700,000 barrels per day, or more, surplus in 2016 even if OPEC production were to slide down to 29.0 million barrels per day.
It is unlikely that Saudi Arabia will take strong action to lift prices, according to ESAI Energy Principal, Sarah Emerson.
"We do believe OPEC as a whole will stumble into a modest reduction in output that will keep Brent generally near $85. But, absent a new supply disruption, OPEC will remain under periodic pressure to defend that price in a fundamentally weak environment through 2016," Emerson said.
During Wednesday's electronic trading on the New York Mercantile Exchange the West Texas Intermediate (WTI) for December delivery increased by $1.49 to $78.68 a barrel.
December Brent, which is the benchmark price for products in Europe and Asia, increased by $0.13 to $82.95 a barrel on the London-based ICE Futures Europe exchange.
The issue of whether to keep or cut OPEC's oil production quotas will be discussed on November 27. Cartel's current production quota amounts to 30 million barrels per day (mbd). OPEC holds 60 percent of the world's oil reserves and 30 percent of supplies.