No deal impending between OPEC, non-OPEC countries
OPEC's latest statement about its readiness to engage with other producers to achieve 'fair prices' appeared to be one of the catalysts for oil prices, however a deal is unlikely to be achieved, analysts from the US JP Morgan bank believe.
“Over the past three trading days, the cumulative percentage gain in Brent oil futures has exceeded anything seen since the lows of the global financial crisis in 2008-09,” analysts said in a report obtained by Trend.
Another catalyst, for the strong oil prices rally was the release of EIA monthly data that indicated that US production has peaked in April and declined by 0.3 million barrels per day over May and June.
JP Morgan analysts see the shift in OPEC strategy to defend market share as having three main objectives.
- OPEC members resolving their differences as to quota allocation and working as an effective cartel.
- Co-operation with non-aligned petroleum exporters e.g. Russia, Norway or Mexico. However bank’s analysts still see little prospect of a deal being reached with the countries above, but still see the economic logic of any such arrangement.
- High cost non-OPEC producers cutting back production.
“None of the above has happened yet. Or at least that has been what the data indicated until now,” analysts said in the report.
In its latest report OPEC said that it stood ready to talk to all other oil producers.
“But this has to be on a level playing field. OPEC will protect its own interests. As developing countries, its Members, whose economies rely heavily on this one precious resource, can ill afford to do otherwise,” the report said.
OPEC is not due to meet until Dec. 4. The current oil production quota of OPEC amounts to 30 million barrels per day.
Saudi Arabia, the world's top oil exporter, and other Gulf states pushed OPEC's strategy shift last year to defend market share rather than cut output to support prices.
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