In the past, OPEC meetings used to trigger market concerns. A few years ago, the group met as many as seven times a year, often making surprise decisions as it tried to micro-manage oil markets. It is expected that OPEC’s output policy will be left unchanged in the meeting Friday this week. Short-term market management will continue to be guided by Saudi Arabia.
North America’s shale boom is causing a decline in demand for OPEC oil until the end of this decade. US last year recorded the biggest annual increase in oil output since it became an oil producer, with an incremental 850,000 bpd.
OPEC delegates say the group will stick with an output target of 30 mbd, as the oil price is close to Saudi Arabia’s favoured 100 USD/bbl. OPEC may need to cut output next year, which may require individual production allocations.
Large-scale maintenance and colder weather supported gas prices last week, and will continue to support this week.
Low gas storage levels across Europe could endanger supply security this winter, infrastructure operators have warned. Data shows that European stocks were 31% full last week, compared with 52% a year earlier, as unseasonably cold weather this spring led to higher gas demand and has put injections behind schedule. Also, narrowing summer and winter contract spreads means there is little financial margin for shippers to use storage.