Oil prices fell 2 per cent on yesterday on signs leading oil exporters were struggling to agree a deal to cut production to reduce global oversupply. The Organisation of the Petroleum Exporting Countries (OPEC) will meet in Vienna today aiming to implement a deal outlined in September to cut output by around 1 million barrels per day (bpd), from around 33.82 million bpd in October.
But key OPEC members appear to disagree over details of the agreement and some analysts have suggested the meeting may fail to reach a deal or produce one that is unworkable.
Indonesian Energy Minister Ignasius Jonan said he was not sure OPEC would clinch a deal to limit oil output when it met. “I don’t know. Let’s see. The feeling today is mixed,” he told reporters when asked about the prospects of a deal.
Brent crude oil LCOc1 was down 90 cents a barrel at $47.34. US light crude oil CLc1 was down 95 cents, or 2.02 per cent, at $46.13 a barrel. Non-OPEC producer Russia confirmed yesterday it would not attend the OPEC gathering, but added that a meeting between the group and non-affiliated producers at a later stage was possible.
“Volatility is set to be high in the oil market in the days ahead,” analysts at Barclays said. Intense negotiations would be needed today to cement a deal, Goldman Sachs analysts said. “The latest headlines suggest that while there is a broad agreement on the rationale for a cut, political considerations and country level quota negotiations are so far preventing a deal from being reached,” Goldman Sachs said.
There remains disagreement among OPEC members over which producers should cut by how much. If OPEC agreed a production cut to 32.50 million bpd, crude prices would likely rise to the low $50s a barrel, Goldman said.
Agencies
UM– USEKE.RW
