OPEC: Oil market pricing in 'no quota change', ministers send conflicting signals

Oil markets are pricing in a no change scenario in terms of OPEC's production, with the 12 member producers’ collective poised to confirm this later on Friday, despite internal differences.

At 0915 GMT, the Brent front month futures contract was up 0.25% or 11 cents, with none of the initial soundbites from influential Middle Eastern producers, led by Saudi Arabia, suggesting a cut below OPEC’s 30 million barrels per day quota was on cards. Quite the contrary, latest data points to its production being well in excess of 31 million bpd.

Speaking before Friday’s OPEC proceedings, Saudi Oil Minister Ali Al-Naimi said he “would listen to other members concerns” about the state of the market.

That’s led market commentators to opine the Saudis might be more amenable to a cut in 2016, should non-OPEC heavyweight Russia come on board and there is an uptick in demand, while resisting a cut on Friday.

A spot poll of nine analysts in Vienna, Austria by Sharecast, had all opining in favour of a no-change scenario at OPEC. Additionally, analysts at Barclays, Deutsche Bank, IG Markets and CMC Markets are all expecting a similar outcome, as is ratings agency Fitch and commentators from global advisory firm EY.

Elsewhere, United Arab Emirates Minister of Energy Suhail Mohammed al-Mazrouei told reporters he expects “oil demand to rise in 2016” albeit modestly. “A lot will depend on where the market demand is.” In response to a question from Sharecast on the impact of a possible interest rate hike on commodity prices, al-Mazrouei said, “It was one of the factors to watch out for over the coming months, among others.”

Meanwhile, Iraq’s Minister of Oil Adil Abd Al-Mahdi said, “Should individual OPEC producers increase their production it cannot be frowned upon. For instance, if Iran ups production, I would say they are entitled to.”

However, Venezuela’s Minister of Petroleum and Mining Eulogio Del Pino said the policy of pumping as much oil on to the market was “unsustainable”.

“OPEC production costs are in any case lower than US shale producers, how they perform within the market is up to them and should not be a consideration for us. The oil price is at a critical low and we must address this.”