National oil ministers from over a dozen countries gathered in Vienna today to address the future of their deal to reduce global supply, but divisions remain over the next step for the Organization of the Petroleum Exporting Countries and its crude-producing allies.
OPEC’s most important member, Saudi Arabia, wants to extend a year-old production-cutting agreement through all of 2018, but Russia hasn’t committed to withholding output for that long, report Benoit Faucon, Summer Said and Christopher Alessi from the scene in Vienna.
Russia isn’t an OPEC member, but its clout has grown in recent years as its production has grown to be the largest in the world.
Saudi Arabia has refused to cut its own output without Moscow’s participation, out of fears that Russian oil companies would steal the kingdom’s market share.
The current agreement expires in March 2018. OPEC and Russia agree the deal should be extended; the question is whether it should be for three months, six months or nine months.
The debate over the next two days will shape the oil market for months to come.
OPEC and its allies including Russia are trying to tightly manage oil supplies that got out of control during the years of $100-a-barrel oil prices, a level that sparked an oil boom in the U.S.
Some fear that limiting output for as long as the Saudis want will overstimulate prices and allow American producers to flood the market.
But the Saudis have already built up expectations in the market for a nine-month extension. Anything less could cause prices to fall, analysts said.
An OPEC technical committee meets on Wednesday and will make a recommendation to OPEC and Russia, which will announce a production decision on Thursday.
Follow The Wall Street Journal’s team in Vienna on Twitter: @benoitfaucon, @summer_said, @chrisalessiwsj and @michaelkamon.
Oil prices fell on Wednesday after data showed a surprise increase in U.S. crude inventories and as OPEC and its allies discussed the fate of their supply-cut deal.
Brent crude, the global oil benchmark, dropped 0.53% to $63.27 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.53% at $57.68 a barrel.
The American Petroleum Institute reported on Tuesday that U.S. crude supplies climbed by 1.8 million barrels for the week ended Nov. 24.Official data is expected from the Energy Information Administration later Wednesday.
HOPES FOR OPEC ACTION BOOST BANKS’ OIL-PRICE FORECASTS
Banks raised their oil-price forecasts for the second month in a row in November amid mounting expectations that OPEC and other big producers will reach a deal to support the market, writes Georgi Kantchev.
A poll of 14 investment banks surveyed by The Wall Street Journal near the end of November predicted that Brent crude, the international benchmark, will average $56 a barrel next year, up $2 from the October survey.
The banks expect West Texas Intermediate, the U.S. oil gauge, to average $53 a barrel in 2018, also up $2 from the previous survey.