Oil prices are trading around three-week highs on hopes an OPEC production cut will be cemented at its meeting on 30 November.
A Nigerian official at an OPEC technical meeting was quoted as saying all countries would be ‘on board’ in time for the official summit. The cartel faces the difficult task of getting its 14 member states, including long-time enemies Saudi Arabia and Iran, plus Russia to agree to a cut.
At an energy conference in Algeria at the end of September the organisation said it would cut output to 32.5 million and 33 million barrels of oil per day (bopd) compared to its recent record output of around 33.8 million bopd.
HOW IT COULD PLAY OUT
In the interim expectations over the ability of OPEC to agree on a freeze have fluctuated.
Investment bank Deutsche Bank has outlined three scenarios for 30 November. Its central case is that a cut is agreed but not fully complied with, feeding into a 2017 OPEC production forecast of 33.4 million bopd.
‘Going beyond our base case, a plausible and more constructive outcome would be the commitment to the 32.5 mmb/d production level and avoiding any mention of a 33.0 mmb/d level,’ it adds.
Although the ultimate ‘bearish’ result for oil prices is an abandonment of its deal, in its view a more likely negative outcome is a postponement.
