OPEC Meeting

[dan_s]

Oil is going to flop around this week as the "experts" tell us what OPEC is going to do. My SWAG is that they announce a 500,000 to 1,000,000 cut in their quotas. However, I have no idea what they really will do. Below is what the "experts" are guessing. - Dan

Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, expects OPEC to take action to stem the slide in prices. He doesn't think Saudi Arabia is trying to push oil to $70 a barrel in an effort to choke off U.S. shale production. “With the exception of Qatar and Kuwait, the rest of OPEC is fiscally challenged at prices below $100 (a barrel). It is not in the interest of OPEC to become financially fragile, given heightened social spending needs and the threat of ISIS spreading in the Middle East,” the BNP Paribas analysts said. The 12-member group would need to reduce production by between 1 million and 1.5 million barrels a day to shake off the negative sentiment in the market, BNP Paribas SA said yesterday in an e-mailed report.

The Saudis will manage supply and demand to achieve a “stable, higher” price range for oil, analysts at Credit Suisse said in a note Thursday. The most likely scenario is that Saudi Arabia will lead OPEC to a supply cut, they said. Officials there may be just as stunned with oil’s low prices, “and their lateness to react may be just that,” the Credit Suisse analysts said.

Giovanni Staunovo, an analyst at UBS AG in Zurich, is predicting the Organization of Petroleum Exporting Countries will reduce output 500,000 barrels a day at the meeting. Such a move would help trigger a rebound in crude to a range of $90 to $100 a barrel, the analyst estimated. "Quite simply, the world needs less OPEC oil at the moment," Staunovo said. "But more important to me is that they can realize higher revenues by cutting prices and seeing prices that are stable or higher."

[dan_s]

Ministers from OPEC members Venezuela and Iran have embarked on a diplomatic tour of other OPEC nations to build a consensus for higher oil prices ahead of the cartel’s Nov. 27 meeting.

Analysts have said several OPEC member countries need higher oil prices to balance their government budgets.

http://www.marketwatch.com/story/crude- ... 2014-11-14