OPEC is not cutting the oil output even if the price plunges till $40
According to the United Arab Emirates' energy minister, OPEC will stand by its decision not to cut output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, as Bloomberg informs.
Brent crude, a pricing benchmark for more than half of the world’s oil, added 49 cents to $62.34 a barrel on the ICE Futures Europe exchange at 12:04 p.m. Singapore time. The contract on Dec. 12 closed at the lowest close since July 2009. West Texas Intermediate crude rose 40 cents to $58.21.
OPEC won’t immediately change its Nov. 27
decision to keep the group’s collective output target unchanged at 30
million barrels a day, Suhail Al-Mazrouei said.
Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5.
“We
are not going to change our minds because the prices went to $60 or to
$40,” Mazrouei told Bloomberg yesterday at a conference in Dubai. “We’re
not targeting a price; the market will stabilize itself.” He said
current conditions don’t justify an extraordinary OPEC meeting.
“We need to wait for at least a quarter” to consider an urgent session, he said.
OPEC’s 12 members pumped 30.56 million barrels a day in
November, exceeding their target for a sixth consecutive month, data
compiled by Bloomberg show. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia,
feeding speculation that they’re fighting for market share amid a glut
fed by surging U.S. shale production.
A raise of about 6 million barrels a day in non-OPEC supply, together with speculation in oil markets, pushed the recent drop in prices, El-Badri said, without specifying dates for the higher output by producers outside the group such as the U.S. and Russia. He also considers the prices will rebound soon due to changes in the global economic cycle.
“We will not have a real picture about oil prices until the end of the first half of 2015,” El-Badri said. Price will have settled by the second half of next year, and OPEC will have a clear idea by then about “the required measures,” he said.
Last month OPEC kept its target unchanged because the group was uncertain whether a cut ranging from 1 million to 1.5 million barrels a day would have boosted prices, El-Badri said. The organization wasn’t intending to put pressure on the U.S. or Russia by maintaining output, he said.
“Our expectation in OPEC
is that after 2020, the oil industry in the U.S. will decline” due to
the nation’s low reserves, he said.
The U.S. won’t become
self-sufficient in oil and will continue to depend on Middle Eastern
supply, El-Badri said. U.S. oil drillers last week idled the most rigs in almost two years as crude tumbled below $60 a barrel.
Producers including ConocoPhillips (COP) have curbed spending, and the number of rigs is declining from a record 1,609, threatening to slow the shale-drilling boom that has propelled U.S. production to the highest level in three decades.
