An OPEC marathon meeting wrapped up late Thursday without a news conference outlining the group's decision as crude oil prices benefited from rumors that a deal would deepen quota reductions.
According to Bloomberg, as the OPEC meeting finally concluded, Saudi Oil Minister Prince Abdulaziz bin Salman allegedly said "Tomorrow everything will be transparent." The news conference was canceled earlier in the wake of claims that Iraq opposed cutbacks.
OPEC and non-member allies such as Russia are proposing a production cut of 500,000 barrels per day in the first quarter of 2020, according to Russian Energy Minister Alexander Novak in Vienna.
Proposed Cuts
But the existing, lower limit will come into effect only if all OPEC members were to accept their proposed reductions, which was not easy to achieve. Officials agreed to meet in March to address the continuation of these reductions.
The so-called OPEC+ alliance had been predicted by economists to maintain existing production cuts, which remain at 1.2 million barrels per day, until June or the end of 2020. The current deal is scheduled to arrive at some closure March next year.
Earlier in the week, Iraq had likewise proposed for a further cuts in its quota of 400,000 BPD production. But the realistic effect of such reduction would seem to be muted, analysts said.
OPEC's actual reduction numbers are already about 400,000-500,000 more than the 1.2 million barrel limit, as Saudi Arabia has already made bigger cuts to cushion other oil refiners that are producing more than their targets.
New Gas Fields
In addition to undermining the current agreement, Novak said OPEC+ would exclude condensate from Russia's oil quota, enabling it to raise gas production while still adhering to the existing quota legally. In the Arctic and East Siberia, Russia has opened new gas fields and launched a new gas pipeline to China.
Crude oil prices eased off from session peaks on Thursday, despite an increase on a greater than anticipated fall in U.S. inventories on Wednesday.
U.S. crude oil prices rose and fell until they stabilized at the $58.43 region. Brent opened at $63.45 a barrel by 0.7 percent, but pared late sales.
Exxon Mobil, on the other hand, dropped by 0.34 percent and Chevron was down by 0.4 percent. Nonetheless, according to MarketSmith chart analysis, all Dow Jones oil giants are still below their 50-and 200-day lines when their relative strength lines fall. BP's stocks listed in the U.S. dropped 1.2 percent, while Royal Dutch Shell tumbled 0.5 percent.
