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Opec officials question upbeat outlook ahead of policy meeting
[VIENNA] Opec officials questioned an upbeat forecast from the group's researchers in a meeting ahead of next week's gathering of oil ministers, with some sceptical there will be a quick easing of the supply glut in 2016.
The comments point to a less jubilant mood in the Organization of the Petroleum Exporting Countries, whose oil ministers meet to set policy on Dec 4, than during their last meeting in June. Oil has fallen to US$45 a barrel on oversupply concerns compared to US$65 last time. "Market data is showing loads of uncertainties," said one source.
Opec's national representatives - officials representing the 12 member-countries, plus officials from OPEC's Vienna secretariat - are meeting to discuss the market. The meeting, called the Economic Commission Board, is continuing on Friday for a second day.
A year ago, Opec made its historic decision to refuse to prop up prices by cutting supply and focus on defending market share. The shift was led by Saudi Arabia, supported by other Gulf Opec members. Doubts about the policy among less wealthy members are growing.
Opec's research team expects higher demand for the group's oil in 2016 as supply from rival producers declines for the first time since 2007, reducing the global supply glut compared to 2015.
One of the differences in views being aired, an Opec delegate said, is around whether this forecast is too optimistic, while another delegate was downbeat about the outlook. "No, it is not," the second delegate said, asked if the market outlook appeared better. "It is complicated." "We think it will take a longer time for the market to go back to stability. Maybe another year and half," another delegate said before the ECB meeting.
Nonetheless, Opec is widely expected to leave its current policy in place when ministers meet.
Delegates from Gulf Opec members have made clear that any U-turn would be possible only if large producers outside Opec, notably Russia, were to join coordinated output cuts. The chance of that happening currently looks slim. "I am not very optimistic any breakthrough will happen during the coming Opec meeting," said a delegate from a country that wants supply cuts who is yet to arrive in Vienna. "I hope I will be proved wrong."