– US output surge –
Rather than cut its official output ceiling, OPEC could decide to reduce the amount it is over-producing.
“The minimum consensus that appears likely to be reached at OPEC’s meeting is a commitment to better comply with the official production target of 30 million barrels per day,” Commerzbank analysts said in a note to clients.
Ahead of the meeting, the world’s top oil producer Saudi Arabia has cut what it charges US customers, in a move seen aimed at maintaining its market share as it is faced with increasing competition from oil extracted from shale rock in the United States.
Pugh said that “any cut in the cartel’s production target will simply be as a response to lower demand for its oil, rather than a concerted attempt to push up prices”.
Faced with surging US output – crude production in the world’s biggest economy is set to hit a 45-year high of 9.5 million barrels a day in 2015 – Venezuela has called for a meeting of OPEC and non-OPEC countries to address the slide in oil prices.
Venezuela depends on crude exports for 96 percent of its foreign currency, and the price crunch has added to the headaches of a government struggling to halt rampant inflation and ease severe shortages of food and medicine.
“What is for certain is that the price is currently trying to find a new equilibrium after a number of years with crude oil trading above 100 dollars,” said Saxo Bank analyst Ole Hansen.
“High prices were primarily driven by a rapid increase in demand from emerging economies and as a result of high prices we saw the emergence of new sources of supply, not least shale oil.”
