OPEC is not going to raise productions
Posted: Wed Jun 11, 2014 3:52 pm
From the OPEC website:
OPEC 165th Meeting concludes
Vienna, Austria: 11 Jun 2014
The 165th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Vienna, Austria, on 11 June 2014 under the Chairmanship of its President, HE Omar Ali ElShakmak, Acting Minister of Oil & Gas of Libya and Head of its Delegation.
The Conference reviewed recent oil market developments and world economic growth, as presented by the Secretary General, in particular supply/demand projections for the second half of the year, as well as the outlook for 2015, noting that the relative steadiness of prices during 2014 to date is an indication that the market is adequately supplied, with the periodic price fluctuations being more a reflection of geopolitical tensions than a response to fundamentals. The Conference observed, however, that, whilst world economic growth was projected to reach 3.4% in 2014, up from 2.9% in 2013, downside risks to the global economy, both in the OECD and non-OECD regions, remain unchecked.
The Conference noted, moreover, that whilst world oil demand is expected to rise from 90.0 mb/d in 2013 to 91.1 mb/d in 2014, non-OPEC supply is projected to grow by 1.4 mb/d, with OECD stock levels, in terms of days of forward demand cover, remaining comfortable. [IEA recently reported that global demand for oil will reach 94 million bbls per day by the end of the 3rd quarter. I think the difference may be that IEA includes biofuels and OPEC does not. - Dan]
In light of the foregoing, the Conference again decided that Member Countries should adhere to the existing production level of 30.0 mb/d. In taking this decision, the Conference unanimously agreed that Member Countries would, if required, take steps to ensure market balance which is so important to world economic activity. Member Countries, in turn, reiterated their willingness to firmly respond to developments that might jeopardize oil market stability.
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My take is that it would be difficult for OPEC to increase production and they like where oil prices are. If you look at the 5-year chart for Brent (which you can see on our home page), you will see that Brent has been flopping around in the $100 to $110 range for three years. Saudi Arabia needs at least $100/bbl to fund their social programs and they are committed to keeping it there. I believe we have seen the last of WTI below $90/bbl, unless there is a significant global recession. - Dan
OPEC 165th Meeting concludes
Vienna, Austria: 11 Jun 2014
The 165th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Vienna, Austria, on 11 June 2014 under the Chairmanship of its President, HE Omar Ali ElShakmak, Acting Minister of Oil & Gas of Libya and Head of its Delegation.
The Conference reviewed recent oil market developments and world economic growth, as presented by the Secretary General, in particular supply/demand projections for the second half of the year, as well as the outlook for 2015, noting that the relative steadiness of prices during 2014 to date is an indication that the market is adequately supplied, with the periodic price fluctuations being more a reflection of geopolitical tensions than a response to fundamentals. The Conference observed, however, that, whilst world economic growth was projected to reach 3.4% in 2014, up from 2.9% in 2013, downside risks to the global economy, both in the OECD and non-OECD regions, remain unchecked.
The Conference noted, moreover, that whilst world oil demand is expected to rise from 90.0 mb/d in 2013 to 91.1 mb/d in 2014, non-OPEC supply is projected to grow by 1.4 mb/d, with OECD stock levels, in terms of days of forward demand cover, remaining comfortable. [IEA recently reported that global demand for oil will reach 94 million bbls per day by the end of the 3rd quarter. I think the difference may be that IEA includes biofuels and OPEC does not. - Dan]
In light of the foregoing, the Conference again decided that Member Countries should adhere to the existing production level of 30.0 mb/d. In taking this decision, the Conference unanimously agreed that Member Countries would, if required, take steps to ensure market balance which is so important to world economic activity. Member Countries, in turn, reiterated their willingness to firmly respond to developments that might jeopardize oil market stability.
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My take is that it would be difficult for OPEC to increase production and they like where oil prices are. If you look at the 5-year chart for Brent (which you can see on our home page), you will see that Brent has been flopping around in the $100 to $110 range for three years. Saudi Arabia needs at least $100/bbl to fund their social programs and they are committed to keeping it there. I believe we have seen the last of WTI below $90/bbl, unless there is a significant global recession. - Dan