OPEC Production Freeze Never Likely To Happen

The Organization of Petroleum Exporting Countries (OPEC) will not impose a production freeze at a meeting next week, say oil and gas analysts at FirstEnergy Capital.

“With some possibility that U.S. crude oil inventories have begun shifting lower and near-term negative price pressures seeing some relief, this might provide the basis for a non-decision by OPEC members next week regarding a production freeze, not that we thought one was ever likely to happen,” said FirstEnergy’s Martin King in a brief research note sent to Rigzone.

“We strongly feel that there is little fundamental reason for prices to move lower than the recent lows that have occurred. Perhaps crude oil is actually modestly underpriced – dare we say, $50 per barrel makes more sense?” he added.

OPEC members Saudi Arabia, Qatar and Iran met in Vienna a week before the organization holds talks in Algeria, Bloomberg reported Thursday.

The oil producers met at the headquarters of the Organization of Petroleum Exporting Countries in Vienna, according to people familiar with the matter. They were making preparations for informal discussions between energy ministers from OPEC and Russia in Algiers next week, according to sources who asked to remain anonymous.

OPEC’s last attempt to reach a deal fell apart in Doha in mid-April when Saudi Arabia insisted that Iran also had to freeze production. Iran had refused because it was just starting to revive exports following the end of international sanctions.

At the time of writing, the price of Brent Crude Oil was valued at $46.83 per barrel.

RIGZONE