OPEC+ considering oil output cut decision at next week’s meeting
(Bloomberg) — OPEC+ has begun discussions about lowering oil output when it meets next week, as a fragile global economy continues to weigh on crude prices.
The size of any supply reduction is still under consideration, said delegates, asking not to be identified as the talks are private. The Organization of Petroleum Exporting Countries and its allies will meet to decide November output levels on Oct. 5.
Oil prices have slumped by a fifth since early August as central banks become more hawkish and coronavirus lockdowns hinder China’s economy. The losses threaten the spectacular windfall being enjoyed this year by Saudi Arabia and other major producers.
Still, prices have risen this week, with Brent trading around $89 a barrel on Thursday, partly in anticipation of OPEC+ decreasing production.
“We don’t exactly know what we can do to fix this, but for us, the only instrument that is available is to cut production if prices go too low,” Sylva said.
Banks such as UBS Group AG and JPMorgan Chase & Co. have said OPEC+ may need to cut at least 500,000 barrels a day to stem the oil price slide. All but one of 19 traders and analysts in a Bloomberg survey predicted the 23-nation alliance will agree to a cutback.
“We certainly see a significant chance that the producer group will opt for a substantial cut to try to signal that there is indeed an effective circuit breaker in the market,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC. The drop could be as big a 1 million barrels a day, she said.
With gasoline prices retreating in the US since June, some of that external pressure may be easing. Saudi Crown Prince Mohammed bin Salman met US government officials including White House Middle East Coordinator Brett McGurk last week in Jeddah.
Source: Worldoil.com
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