Go to Admin » Appearance » Widgets » and move Gabfire Widget: Social into that MastheadOverlay zone
The Organization of Petroleum Exporting Countries, supplier of about 40 percent of the world’s oil, is unlikely to announce a further output cut at its next meeting as prices “stabilize,” according to Barclays Capital.
OPEC will probably keep production targets unchanged as long as crude prices remain around current levels and inventory growth continues to slow, according to Barclays’s head of commodities research, Paul Horsnell. The group meets on May 28 in Vienna.
“If they held the meeting today, there’s no reason to change” quotas, Horsnell said in a telephone interview from London. “Prices are stabilizing and starting to nudge up in the direction they want. Seventy dollars is not that far away.”
New York crude has advanced 22 percent since OPEC last met on March 15, when members agreed to keep production quotas unchanged rather than risk damaging the ailing global economy. OPEC announced three output cuts late last year to remove 4.2 million barrels a day in a bid to bolster prices. Oil futures traded at $57.94 a barrel as of 1:02 p.m. London time today.
“Even at $58, it’s not really the level that matters but the trend,” Horsnell said. “Fifty-eight dollars after a gentle rise is very different from $58 after a gentle fall.”
While U.S. crude stockpiles are at their highest in more than 18 years, the slowing trend of inventory growth will be a more important consideration for the group than absolute levels, according to Horsnell.
OPEC’s secretary general and ministers from Algeria and Qatar said last month that members can tolerate a price of $50, less than previous informal targets around $70. Saudi Arabian Oil Minister Ali al-Naimi said April 25 that $50 oil is the country’s “contribution to the world economy.”
OPEC has completed about 83 percent of the output reductions announced last year, according to the International Energy Agency. The 11 members of the group subject to formal limits have a collective quota of 24.845 million barrels a day.
By Grant Smith