Arab Today, arab today opec seen holding oil output to defend market share
Last Updated : GMT 12:05:41
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OPEC seen holding oil output to defend market share

Arab Today, arab today

Arab Today, arab today OPEC seen holding oil output to defend market share

OPEC is expected to keep output steady
London - AFP

OPEC, keen to defend its market share against the US shale oil boom, is expected to hold output levels steady at its Vienna meeting this week, analysts say.

The influential 12-nation Organization of the Petroleum Exporting Countries (OPEC), which pumps about 30 percent of the world's oil, will make the decision Friday at its semi-annual production meeting in the Austrian capital.

Gulf members, led by cartel kingpin Saudi Arabia, will probably resist calls to cut output as they seek to safeguard their share of a market that is plagued by a vast supply glut -- fuelled partly by the boom in shale oil.

"OPEC is likely to confirm its output target of 30 million barrels per day given that its strategy of defending market shares is bearing fruit," said Commerzbank analyst Carsten Fritsch.

"The rapid rise in US crude oil production has been stopped and the oil price has recovered considerably since February."

In recent weeks, oil prices have fought back after the market plunged 60 percent between June and January on the back of abundant supplies.

OPEC refused in November to cut its official daily oil output target of 30 million barrels -- where it has stood for more than three and a half years -- despite the glut.
The move, which sent prices sliding further, was widely regarded as a tactical attempt to boost demand and hurt non-OPEC output, particularly US shale producers which have higher costs.

"The OPEC meeting... is expected to result in a continuation of the status quo -- with no change to the 30 mbpd quota," agreed Citi analyst Seth Kleinman.

While higher prices boost producers' revenues they can also weigh on demand -- and in turn economic growth -- harming the cartel in the long run.

However, faced with a precipitous slump in their earnings, some OPEC members -- led by Iran and Venezuela -- have publicly urged the cartel to cut production to support prices.

- Saudi Arabia 'on track' -

But Saudi Arabia appears determined to pursue its strategy.

"When OPEC decided not to cut output in November, Saudi Arabia outlined its strategy to moderate runaway growth from high-cost non-OPEC suppliers, as well as stimulate global oil demand. The kingdom seems to be on track to achieve these goals," noted Barclays analysts.

The oil market meanwhile remains well down from year-earlier levels.

Oil prices have lost almost half their value since June 2014, when Brent traded at about $115 and New York crude at almost $108 per barrel.
Experts at consultancy Energy Aspects say that the current level of $60 per barrel is causing "ample damage" to non-OPEC supplies outside of the United States.

And in reaction to the price collapse, major oil companies have slashed their exploration budgets and massively reduced their capital expenditure.

At the same time, some OPEC members -- notably Saudi Arabia, Iran and Iraq -- are in fact pumping additional supplies, taking actual OPEC output above the agreed collective ceiling.

Actual OPEC production stood at 31.21 mbpd in April, the highest level since September 2012, according to recent data from the International Energy Agency.

In Monday morning trade, the oil market slid on renewed supply glut concerns ahead of the OPEC gathering.

US benchmark West Texas Intermediate (WTI) for July delivery dropped 59 cents to $59.71 per barrel, while Brent for July shed 63 cents to $64.93.

 

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Arab Today, arab today opec seen holding oil output to defend market share Arab Today, arab today opec seen holding oil output to defend market share

 



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