AtoZForex.com Lagos – OPEC members meet on Friday, following a two-day seminar which involved the chief executives of the world’s biggest energy groups, including BP (BP.L) and Exxon (XOM.N). These companies have been well affected by the OPEC;s decision to abandon efforts aimed at sustaining oil prices at more than $100 a barrel in favour of defending market share.
The outcome of the meeting of the OPEC leaders tomorrow is almost certain to result in a carry on of the same level of oil production, as last years’ shock market therapy is seen to have awoken demand and hampered growing competition. Oil prices have now stabilized around $65 (43 pounds) a barrel, about $20 above January lows.
A senior Gulf OPEC delegate told Reuters late on Tuesday after an informal meeting of the four core Gulf Arab OPEC members earlier in the day: “There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged.” Iraqi oil minister Adel Abdel Mahdi also said there was “optimism and general acceptance with the current situation”.
There has been a fundamental shift in the tone compared to the last meeting in November. Previously, speculation was mounting about a possible implementation of a production cut at OPEC’s next meeting in June. The effort for a cut in output to boast oil prices was being championed by Iran supported by Venezuela, although even the Iranians know the proposal is unlikely to be accepted. In responcse to this bid, Saudi Arabia laid out its new laissez faire approach, saying it will no longer consider cutting output without the cooperation of non-OPEC producers such as Russia. It is now clear that the OPEC rate of oil production is set to be maintained at high limits, therefore muting calls for production cut.
Some Investment Banks have given their view on where oil prices are headed.
Goldman Sachs oil prediction opines that the setup is forming for another dip in oil prices, possibly as low as $45 per barrel by October. “We find that the global market imbalances are in fact not solved and believe that the rally will prove self-defeating as it undermines the nascent rebalancing,” Goldman analysts wrote in an investor’s note.
Merril Lynch expects prices to range around $60 a barrel while according to Standard Chartered oil prices should hover around $90 a barrel by the end of 2015.