Coverage: OPEC meets to discuss oil production cuts

Members of the Organization of the Petroleum Exporting Countries and the so-called NOPEC alliance will meet on Monday in St. Petersburg, Russia, to talk about how the oil production cuts are coming along.

Tracy Johnson of CBC News had the story:

OPEC’s compliance with the agreed-upon production cuts slipped in June. The numbers vary a bit, but the International Energy Agency suggested that OPEC compliance fell to 78 per cent.

OPEC nations committed to cut just below 1.2 million barrels per day (bpd), and non-OPEC nations such as Russia and Mexico agreed to cut just under 600,000 bpd.

Libya and Nigeria, OPEC members that are exempt from the cuts, both increased production in the past two months in the range of 300,000 bpd, undercutting support for the price of oil.

Much has been written about OPEC’s waning influence in the oil market. Its attempts to push prices up over the past six months are the clearest illustration of that yet.

Nigeria and Libya’s oil ministers have been invited to the meeting in St. Petersburg, which will also include representatives from Russia, Saudi Arabia, Algeria, Oman and Kuwait.

Osamu Tsukimori of Reuters reports that oil prices are steady ahead of the meeting:

The joint OPEC/non-OPEC ministerial committee could also discuss a deeper cut in production, but more studies are needed, according to one of the sources.

Kuwait’s oil minister, Essam al-Marzouq, said on Saturday that compliance was good with oil production cuts by OPEC and non-OPEC countries and that deeper cuts were possible.

London Brent crude for September delivery was unchanged at $48.06 a barrel by 2228 GMT on Sunday. The contract settled down $1.24 or 2.5 percent on Friday after a consultancy forecast a rise in OPEC production for July despite the group’s pledge to curb output.

NYMEX crude for September delivery was down 2 cents at $45.75.

A rebalancing of the oil market is progressing more slowly than expected, but it will speed up in the second half of the year, OPEC Secretary General Mohammad Barkindo said on Sunday.

Georgi Kantchev and Benoit Faucon of The Wall Street Journal report that an oil glut still exists:

Over the weekend, the Organisation of the Petroleum Exporting Countries said, its ministers have held a series of “intensive consultations” about the challenges for an output-cutting deal the 14-nation cartel struck last year with Russia and other big producers.

The agreement was supposed to take almost 1.8 million barrels of crude oil off the global market and drain an oversupply that has weighed prices down for three years and sent a shock through the economies of oil-producing economies. But prices have remained stubbornly low as the glut persists.

Brent, the international benchmark, fell 2.5 per cent, to $US48.06 on Friday because of doubts about OPEC’s ability to turn around the market.

Saudi Arabian energy minister Khalid al-Falih cut short his vacation to come to St. Petersburg for a committee meeting he sometimes skips because of the gathering’s sudden “strategic importance” and “the high expectations of the times,” said OPEC Secretary General Mohammad Barkindo.

Mr Falih has been calling OPEC oil officials all weekend, said a person close to the minister, describing him as “very nervous.” Mr Falih declined to speak with reporters. A Saudi oil ministry official didn’t respond to a request for comment.