OPEC countries and other producers including Russia are backing prolonging last year’s production cut to shore up crude prices, strongly indicating that an extension is a done deal even before they meet formally on the issue today.
What can we expect from the cartel today? Nigeria oil minister sheds more light on the topic in today’s interview with Bloomberg TV.
- Nigeria supports prolonging output cuts by 9 months and sees option of rollover for 3 months after that
- Almost all members are on board with 9 months cut
- Crude at $50 is “realistic” if group sticks to agreed limits; price of $60 seems “optimistic”
- Shale hasn’t fully exhausted capacity to hurt OPEC
- Nigeria making progress on security and petroleum policy
The output reductions have been in effect since November, when the Organization of the Petroleum Exporting Countries agreed to cut production by 1.2 million barrels a day, while non-OPEC countries chipped in with a further 600,000-barrel reduction. That deal, which has helped push up oil prices, is due to expire at the end of June.
What’s more, it’s not only Nigeria that sees an extension of cuts. Saudi Energy Minister Khalid al-Falih noted a trend among participants to prolong the cuts for nine months. OPEC Secretary General Mohammad Barkindo said there is "growing consensus" for an extension.
The meeting begins in about an hour and we will know the latest decision when the press conference starts this afternoon. The market’s consensus is that the output reduction will be extended by 9 months with current quotas. However, a different outcome shouldn’t be ruled out. Our take on the meeting and possible trading opportunities can be found here.
Oil WTI remains in the uptrend since falling to 44 dollars per barrel. A bullish outcome of the meeting could lead to a test of 53.50. source: xStation5