EMEA News
Mixed Signals About Extension Talks Come in Advance of Friday OPEC Meeting
As the hours count down to the highly-anticipated meeting of the Organization of the Petroleum Exporting Countries (OPEC) and non-members in Vienna, mixed signals are increasing from participants with regards to the prospect that the cartel will extend its production cutback initiative beyond next March.
On one hand, Mustapha Guitouni, energy minister for Algeria, told reporters that they would discuss the matter; on the other Alexander Novak, energy minister for Russia, said "Everybody believes now that it's still too early to talk about concrete timing of extending; we will monitor closer to the end of the agreement, when it would be possible to discuss it more."
Further, Bloomberg notes that Jabbar Al-Luaibi, oil minister for Iraq, suggested there could be a 1 percent increase in reduction volumes; but Novak said there is no formal proposal for such an increase.
Issam Almarzooq, oil minister for Kuwait, is also of the opinion that OPEC will not consider an extension when it convenes in Vienna on Friday.
John Kilduff, founding partner at Again Capital, warned, "There are some rumors around the market that they may either make a call or look to implement an extension of the cutback plan, so that's proving somewhat supportive, although to the extent that they don't, prices could get punished."
Paul Crovo, oil and equity analyst at PNC Capital Advisors, predicted that ministers "may try to lay out some preliminary numbers, but I don't think you'll see anything concrete come out."
What does seem to be certain for Friday's agenda is that OPEC and non-OPEC countries will discuss a monitoring procedure for oil exports in order to assess compliance - which, unsurprisingly, members and non-members claim is proceeding smoothly.
Essam al-Marzouq said compliance with output cuts was improving and above 100 percent: "It is very good, better than last month."
One thing is also certain: if OPEC continues to maintain its normal course of operations, it will not achieve the market rebalance it is seeking: this is the contention of the International Energy Agency, which last week noted that if it maintains its current level of production through 2018, global stocks will not fall dramatically.
