OPEC has no plans to hold an emergency meeting amid falling oil prices, according to a delegate from the group, Bloomberg reported Feb. 24.
Crude prices have dropped almost 50% from a June peak as OPEC refused to cut production and U.S. output reached a three-decade high. There have been no concrete discussions about holding an emergency meeting, said the delegate, who asked not to be identified because the group’s talks are private. OPEC’s next regular meeting is schedule for June 5.
Brent for April settlement, the international benchmark, slipped 5 cents to $58.85 a barrel (bbl) on the London-based ICE Futures Europe exchange at 10:48 a.m. local time. On Monday, prices rebounded to gain as much as 45 cents in intraday trading after OPEC President Diezani Alison-Madueke said in an interview with the Financial Times that she will call a meeting if prices keep declining.
“An emergency meeting would suggest that they are going to do something to support the market,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion. “If there is no emergency meeting, then there is no reason to get excited, and that’s really where we are now.”
Low Probability
OPEC, which supplies about 40% of the world’s crude, pumped 30.9 MMbbl/d in January, exceeding its target for an eighth straight month, according to production estimates compiled by Bloomberg.
If the oil price “slips any further it is highly likely that I will have to call an extraordinary meeting of OPEC in the next six weeks or so,” Alison-Madueke said in the interview.
There’s a “low probability” that OPEC will either gather or change its existing 30-MMbbl production target before June 5, said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. Even when they do convene, it’s unlikely the target will be altered, according to banks including Societe Generale SA and Bank of America Corp.
“Saudi Arabia and its Gulf allies were responsible for November’s decision” to maintain output, and those countries have signaled they intend to maintain this course, Staunovo said in a report.
The minister’s comments may be intended for her “domestic audience” as Nigeria’s economy falters before presidential elections, said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland. The vote has been delayed from Feb. 14 to March 28. Nigeria relies on oil for 70% of its export income.
The Energy Information Administration (EIA) forecast that U.S. output will increase to 9.3 MMbbl/d this year, the most since 1972. Crude stockpiles in the country rose to 425.6 MMbbl as of Feb. 13, the most in EIA weekly data beginning 1982.
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