OPEC Goal Is Self-Protection, Not Re-Balancing or $70 Oil: Analyst

OPEC's oil reduction agreement currently in its second month of implementation.

In what may qualify as the most outspoken opinions yet about the true driver of the Organization of the Petroleum Exporting Countries' (OPEC) oil reduction agreement currently in its second month of implementation, Richard Gorry, managing director at JBC Energy Asia, told CNBC, "Don't expect $70 oil, because that wasn't the objective" – nor, he added, was a market re-balance.

Instead, the goal was self-protection.

Gorry said, "We never expected the market to re-balance this year; I know some analysts did say it would come in 2016, pushed it later to 2017, but we don't see a real re-balancing to come till much, much later.

"Right now, the oil market is oversupplied by about 500,000 barrels per day [and] to see inventories go up is absolutely no surprise to us."

He went on to note that OPEC members "were really trying to protect oil price on the downside, because in the last two quarters we literally saw prices fall off a cliff, and OPEC were very mindful of that coming into this year.

"I think they knew the market wouldn't be re-balanced, but they were making sure the producers were protected on the downside; so if you look at the current prices, they've done exactly that."

Gorry's remarks suggest that prices will remain stagnant for the foreseeable future, and this too is the opinion of Eric Wiegand, senior portfolio manager at U.S. Bank; he told CNBC that ample supply is coming to market thanks to a "remarkable" recovery of U.S. shale, and he predicts prices "will remain range-bound somewhere in the $50s for the remainder of the year."

Despite recent rumblings from some OPEC members and non-members like Russia that an extension of the agreement may be in the offing, Gorry doesn't see the cuts "lasting into the second half of the year, so we will expect that compliance will break down as we come into the summer and we have more demand from refiners."

But as is always the case with any aspect of the oil sector, there is no shortage of contrary opinion about where the market – and OPEC – is headed: Richard Mallinson, analyst for Energy Aspects, told Reuters "There's a good chance and high odds that the group (OPEC) decides that they want to continue this process."

Presumably, Mallinson bases his opinion on the fact that while most producers appear to be sticking to the reduction deal, it's questionable how much beneficial impact the cuts are having on global inventories, currently approaching record highs.

Earlier this month, Boris Schlossberg, managing director of foreign exchange strategy for BK Asset, worried that oil is in "a very dangerous zone" and that "the irony of this whole thing is that OPEC cuts are holding, but the demand is not there.

"And if it trips to $50 a barrel stops, I think it could really tumble very quickly; so I think we're in a perilous territory."