Oil output levels won’t change; members say market should influence price
June 3, 2016: The price of oil rose slightly despite OPEC producers failing to come up with a solution to curb output at their meeting on Thursday. Brent crude on Thursday ended at $49.94 a barrel, 0.4% higher.
The new oil minister in Saudi Arabia, Khalid al-Falih, often considered the de facto leader of the OPEC countries, had a message for the global market: don’t expect OPEC to influence oil price by cutting supply.
“I think managing in the traditional way that we tried in the past may never come again,” the minister said on Thursday. “Certainly, we will not go with certain price targets.”
OPEC has revised its figure for global economic growth down slightly to 3.1% and believes that oil demand will increase this year by 1.2mbpd while on the supply side they are expecting a reduction of 740,000 bpd, which presumably relates primarily to the US shale market. Over the last 18 months, OPEC has increased output to 32.50 mbpd and believes this to be the level required from OPEC during the second half of the year with the market coming in to balance. The meet ended with the acknowledgement that OPEC will continue its dialogue with non-OPEC producers.