This week’s meeting of the Organisation of Petroleum Exporting Countries (OPEC) is widely expected to be newsworthy for the absence of news – but a few dissenting voices are arguing the cartel may have a surprise up its sleeve.
Abdalla Salem el-Badri, OPEC’s Secretary-General, said, “the world will need more energy in years to come” on Wednesday, a statement which spoke to the group’s increasing faith in a global economic recovery.
Earlier on Wednesday, Mohammed Saleh al-Sada, Qatar’s oil minister, said demand for crude oil was improving, and “there are a number of reasons to feel optimistic.”
The vast majority of analysts predict another case of the cartel sitting on its hands this week, maintaining current levels of oil production despite historically low oil prices.
The price has recently stabilized in the $60-65-a-barrel range, but even at this level – off year-to-date lows of around $45 a barrel – U.S. shale gas production starts to teeter on the edge of profitability.
Increasing exports from Saudi Arabia, Iraq and Angola have helped buoy supply in recent months – even though falls in the oil price in the last year should, in theory, have led to production cuts.
The group of the world’s biggest oil exporters could potentially move its output quota even higher than its current 30 million barrels a day, according to analysts at Morgan Stanley.
Actual OPEC output is already around 1 million barrels higher than its quota, according to a Reuters survey for May.
The market is “overzealous about a rapid U.S. production decline,” the Morgan Stanley analysts warned, pointing out that the weekly production figures which have caused many to believe that the shale boom production is peaking are not “accurate real time figures” – apart from Alaska.
If OPEC has not yet managed to deal the blow to U.S. shale production that some have accused it of trying to orchestrate, there are growing questions about why they would quit before they have finished.