EMEA News
Oil Deal Doubts Grow, But Analysts Say Crude Prices Are Heading Up Regardless
The view of analysts that the Organization of the Petroleum Exporting Countries (OPEC) is no longer relevant in the 21st century has been further bolstered by Dennis Gartman, publisher of The Gartman Letter, who pegs the cartel's chances of reaching an output reduction agreement that boosts oil prices as doubtful at best.
He told CNBC's Power Lunch Friday, "I think it's going to be difficult even if they get an agreement to put prices very much higher at all."
This is coupled with Miswin Mahesh, oil analyst at Barclays, predicting that fundamentals will drive oil back towards the $50 to $55 per barrel range, regardless of the deal being ratified.
Mahesh too suggests OPEC's glory days are over, telling CNBC on Friday that the loose deal reached in Algeria and to be further discussed in Vienna this month may well turn out to be " a namesake deal: we probably get a three to six month deal where the Saudis do something just to sort of 'save face'."
Treading where many experts have gone before, Mahesh added, "Besides the Saudis, no other country has actually come out and said we will also cut; Iran has said they don't want a fixed number, they need a percentage number which is a moving target as well.
"So it's a very, very complex and it's just getting harder by the day."
Harry Tchilinguirian, head of commodity market strategy at BNP Paribas, agrees: "The discussions that are going to be held in the November 30 meeting are going to be not only difficult but probably acrimonious," he told CNBC, adding, "It's important just for the credibility of this organization to keep it going, [but] what OPEC effectively delivers in terms of the amount of cuts is likely going to be disappointing."
Still, if Friday's figures are any indication, OPEC still retains considerable influence over one group of people: traders.
Moving around $50 for both grades, Brent crude and West Texas Intermediate settled flat in Asia, although they settled 1 percent higher in the U.S. following reports that the Saudi Arabian and Russian energy minsters are willing to reduce peak oil output by 4 percent.
Arguably the biggest indication of the OPEC deal's irrelevance came last week, when the U.S. Commodity Futures Trading Commission (CFTC) and InterContinental Exchange revealed that money managers have bought nearly 218,000 lots of crude futures and options contracts in October, the largest monthly rise to date.
