In line with consensus, the Organisation of Petroleum Exporting Countries (Opec) decided on Thursday to keep current production quotas unchanged. The decision was a speedy one coming just two hours after ministers sat down, something that usually indicates general consensus among the cartel.
Here’s the latest from Bloomberg:
May 28 (Bloomberg) — OPEC decided to keep production quotas unchanged at today’s meeting in Vienna, banking on a recovery in oil demand toward the end of the year. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global crude supply, agreed to maintain production quotas, Saudi Oil Minister Ali al-Naimi said. It’s the second time this year the 12-member group has met without revising that total.
OPEC’s resolve not to cut further comes even as U.S. inventories reached their highest level in two decades earlier this month and after a forecast from the International Energy Agency that global demand is falling the most since 1981. Crude oil for July delivery traded up 1 cents at $63.46 a barrel on the New York Mercantile Exchange at 11:20 a.m. London time. Prices have gained 36 percent since the group’s last meeting in March. OPEC’s choice not to cut further may have been influenced by its failure to complete previous reductions that came into effect at the start of the year.
The 11 nations bound by quotas, which exclude Iraq, pumped 25.81 million barrels a day in April, an increase of about 225,000 from March and the first increase in nine months, according to OPEC’s latest monthly report. The countries have a total target of 24.845 million barrels. That means the group has completed 77 percent of its cuts, down from a revised 82 percent for March. The outcome of today’s gathering is in keeping with a Bloomberg survey, in which 25 of 27 analysts said they expected existing quotas to be upheld.
Nymex WTI crude has ticked slightly higher on news of the decision, presumably on some optimism related to Opec’s bet on a price recovery soon.
However, as Olivier Jakob at Petromatrix summed it up earlier on Thursday, this month’s meeting was always going to be a bit of a non-event, with one minister even choosing to stay home completely. Here’s Jakob’s commentary:
It seems that at least one OPEC member has heard our call to save on the organization carbon footprint, as the Oil Minister from Ecuador decided to stay home. The meeting is priced-in as the mother of all non-event and it is Washington DC that should dictate the price of oil today, with the DOE weekly report but as well with the revisions to the March data which are expected to be released today (however, the DOE has a tendency to be late by one day or two on its announced release date for the monthly revisions).
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