Market in wait-and-see mode ahead of Vienna meeting
Baku, Azerbaijan, Dec.9
By Leman Zeynalova – Trend:
On the eve of the meeting with non-OPEC nations, the market is shifting into a wait-and-see mode as OPEC and US production levels will be monitored closely in the coming months, Anthony Headrick, energy market analyst at CHS Hedging LLC, told Trend Dec.9.
Regarding the record high oil production by OPEC countries in November, the expert said that although this will make the task more difficult, OPEC intends to keep individual country-level adjustments intact as a sign they intend to fulfill the agreement.
Supply from OPEC increased to 34.19 million barrels per day (bpd) in November from 33.82 million bpd in October, a Reuters survey said.
Any revisions to targets will likely be made after the six-month period, according to Headrick.
The expert also commented on the remarks recently made by former Saudi Arabia Oil Minister Ali al-Naimi.
Earlier, Ali al-Naimi said that OPEC’s agreement to cut production for the first time in eight years has the potential to balance the oil market, as long as everyone sticks to it, but "the unfortunate part is we tend to cheat”.
“History shows OPEC is apt to “cheat” on production quotas, but in the case of the recent agreement, that would risk eroding the credibility and influence of OPEC as an organization and would extend oversupply, leading to lower prices,” said Headrick.
During the Vienna meeting held Nov.30, OPEC members decided to implement a new OPEC-14 production target of 32.5 million barrels per day.
The decision was made in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward.
OPEC has invited 14 non-OPEC countries to the meeting to be held in Vienna Dec.10. The invited countries are Russia, Mexico, Oman, Kazakhstan, Bahrain, Colombia, Congo, Egypt, Trinidad and Tobago, Turkmenistan, Azerbaijan, Bolivia, Brunei, Uzbekistan.
Only Azerbaijan, Kazakhstan, Oman, Mexico and Russia have agreed so far to meet the group on Dec.10 for talks aimed at widening a deal to reduce output.