Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

OPEC+ online meeting suggests "nothing to see here" - RBC

Published 29/05/2024, 13:32
© Reuters.
LCO
-
CL
-

Investing.com - A group of major oil producers is set to meet this weekend to discuss future output levels, and RBC Capital Markets expects the cartel to present an united front, keeping policy unchanged.

The Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, is scheduled to meet online, a change from the original in-person plan, on Sunday to discuss their joint oil production policy.

The group is currently cutting output by 5.86 million barrels per day (bpd), equal to about 5.7% of global demand, in an attempt to balance a market hit by falling demand, lifting prices in the process.

The cuts include 3.66 million bpd by OPEC+ members to the end of 2024, as well as a further 2.2 million bpd of voluntary cuts by some members, mainly Saudi Arabia, which expire at the end of June.

The move to forgo an in-person meeting, likely signals a “nothing to see here” production decision through year end, according to analysts at RBC Capital Markets, in a note dated May 28.

“We see no appetite at this juncture to add more barrels to the market and trigger another price move to the downside. The current price level is already causing several producers to take on additional debt and push out timelines for some high-profile projects,” RBC added.

“Adding more barrels at this moment would likely yield a suboptimal price environment that would not be offset by additional market share advantages.”

The bank sees less discord between key OPEC players on the eve of this meeting and more closing of the ranks, as they seek to navigate the geopolitical headwinds caused by ongoing armed conflict in the region.

“As we noted last week, the UAE’s president HH Sheikh Mohammed bin Zayed made a well-publicized visit to Saudi Arabia earlier this month for a meeting with HRH Crown Prince Mohammed bin Salman,” RBC added.

“In addition, it has been announced that the Saudi Crown Prince has accepted an invitation to Iran, a move that marks a major turnaround from 2016 when diplomatic relations were severed in the wake of the attack on the Saudi embassy on Tehran.”

The possibility of a deeper cut, given the recent oil price weakness, can’t be ruled out, the bank said, “given HRH Prince Abdulaziz’s penchant for Hollywood twist endings. However, we tend to see surprise announcements as more likely when ministers gather in person and coalitions of the willing can be assembled at midnight meetings in the Park Hyatt.”

By 08:25 ET (12:25 GMT), the U.S. crude futures (WTI) traded 0.7% higher at $80.36 per barrel, while the Brent contract climbed 0.6% to $84.46 a barrel.

Both benchmarks are on course for losses of between 2% and 3% this month.

Feel ready to dive into details and start finding interesting stocks to invest? Try our AI supported solution InvestingPro today!

Get an extra 10% discount by applying the code UK10 on our 1&2 year plans. Don't wait any longer!

How to buy pro InvestingPro

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.