OPEC May Hold Formal Meeting in Algiers as Oil Glut Persistsby and
Algeria urges 1 million barrel-a-day cut in world crude supply
Oil needs six months or more to stabilize at $50-$60: Bouterfa
OPEC may turn its planned informal meeting in Algiers next week into a formal session as it seeks ways with other producers to cut crude supplies by 1 million barrels a day to re-balance markets and stabilize prices, Algerian Energy Minister Noureddine Bouterfa said.
OPEC will hold an informal meeting after the closing session of the International Energy Forum conference in Algiers on the afternoon of Sept. 28, Bouterfa said on public radio. Depending on discussions until then or even during the informal session, OPEC ministers, since all will be present, can transform the gathering into an extraordinary meeting, he said.
Oil has fluctuated since August’s rally on speculation that the Organization of Petroleum Exporting Countries and Russia will agree next week in Algiers on a strategy to support prices amid an oversupply. OPEC’s 14 members are pumping more than 33 million barrels a day, and inventories will grow even more if no action is taken, Bouterfa said.
“The question is at what level we would freeze or reduce output -- we need to find the good compromise in order not to destabilize the market,” Bouterfa said. “It’s necessary at least to reduce by 1 million barrels a day to re-balance the market. Will we get there? We are working for that.”
OPEC, which supplies about 40 percent of the world’s oil, plans its talks on the sidelines of the International Energy Forum in Algiers as the persisting glut weighs on prices. The group’s members are close to a deal, according to Venezuelan President Nicolas Maduro, while OPEC’s secretary-general said an extraordinary meeting is possible if ministers reach a consensus. Benchmark Brent crude was down 1.5 percent at $45.27 a barrel at 5:33 p.m. in Dubai.
The group’s members will discuss an agreement in Algiers that would last one year, according to comments from OPEC Secretary-General Mohammed Barkindo reported Tuesday by RIA Novosti. He didn’t specify whether they would discuss a pact to freeze production.
The process of re-balancing the oil market must be “fast-tracked,” Barkindo said at a conference in Rome. Inventories are a key issue for producers both in and outside the group, and all parties should sit around a table to discuss how to stabilize the market, he said.
Oil needs another six to nine months to stabilize within a range of $50 to $60 a barrel, Algeria’s Bouterfa said. OPEC must reach an equitable agreement that all its members support, and any accord must also satisfy non-OPEC producers, he said.
“The formula isn’t so easy,” he said. “There are some solutions being drawn up, and there are some scenarios being worked on.”
The surplus in global oil markets will last for longer than previously thought, persisting into late 2017 as demand growth slumps and supply proves resilient, the International Energy Agency said on Sept. 13 in its monthly report. Consumption growth sagged to a two-year low in the third quarter as demand faltered in China and India, while record output from OPEC’s Gulf members is compounding the glut, it said.