Baku, Azerbaijan, Aug.23
By Aygun Badalova - Trend:
Hopes that OPEC and non-cartel producers may reach an output freeze agreement during the upcoming informal meeting have lowered, and that has led to another drop in oil prices after steady growth last week.
On the ICE Futures exchange, the October contract for global benchmark Brent, was down 0.31 percent at $49.39 a barrel while US counterpart WTI fell 0.65 percent to $47.09, according to the Wall Street Journal.
Analysts of the US JP Morgan bank in their weekly Oil Market report, obtained by Trend, noted that many of the preconditions for a production deal appear closer to being in place than at the start of the year.
“However, a deal remains a risk scenario, rather than our base case scenario, that at best we would ascribe a 35 percent chance to becoming a reality”, they said.
For any agreement to be reached, analysts believe, continued evidence will be needed from key OPEC and Non-OPEC participants, e.g. Russia and Iran that are supportive of such an agreement.
“The risks to the current rally will increase as we approach the actual meeting, if the necessary hurdles to reaching an agreement are not cleared, e.g. refusal of a key participant to attend the informal talks, etc.,” analysts said in the report.
The informal OPEC meeting is expected in late September in Algeria. It is expected that the talks on oil production freeze will be held between OPEC and Non-OPEC countries.
Earlier Mohammad bin Saleh Al-Sada, Qatar’s Minister of Energy and Industry and current OPEC President said that despite the current decline in prices, oil market is on the path to rebalancing.
In its latest report, the cartel said it is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market.