OPEC on Monday sounded an optimistic tone about the oil market,
saying that higher demand is expected in the third and fourth
quarters.
The comments, from Qatar energy minister Mohammed bin Saleh Al-Sada,
who serves as OPEC president, are likely to quell any expectations
of a production freeze deal in the near future.
The recent decline in oil prices "is only temporary," and the result
of weaker refinery margins, inventory overhang and the UK's recent
vote to leave the EU, Sada said, according to an OPEC news release.
With major oil consuming countries seeing their economies improve
and winter approaching in the Northern Hemisphere, oil demand will
rise in the next two quarters, he continued.
"This expectation of higher crude oil demand in [the] third and
fourth quarters of 2016, coupled with decrease in availability is
leading the analysts to conclude that the current bear market is
only temporary and oil prices would increase during the later part
of 2016," OPEC stated.
OPEC member countries are scheduled to meet informally on the
sidelines of the International Energy Forum in Algeria from
September 26-28.
The Wall Street Journal on Friday had reported that a production
freeze deal could be mooted at that meeting, citing unnamed OPEC
delegates, but several analysts are doubtful that such a pact could
be agreed.
"Can't help but be sceptical on the resumption of this
merry-go-round again after the January-April go around," Wood
Mackenzie analyst Ann-Louise Hittle said in a tweet.
Another analyst, who spoke on condition of anonymity, said: "As
things stand, we wouldn't expect OPEC to substantially change course
unless there is a significant deterioration in global prices."
The last time a production freeze agreement was on the table,
several OPEC members met in Doha in April along with a handful of
major non-OPEC producers, notably Russia. A deal to keep output at
January levels fell apart at the 11th hour with Saudi Arabia
insisting that Iran -- which did not attend-- participate in any
production agreement.
Iran has said it would not participate until its production reaches
pre-sanctions levels. That could be achieved later this year, though
analysts have said Iran could see difficulties in maintaining that
level of output, given the lack of investment over the past few
years.
OPEC, for its part, said it continues to monitor developments
closely, and is in constant deliberations with all member states on
ways and means to help restore stability and order to the oil
market.
The producer group's next official meeting is November 30.
--Herman Wang,
herman.wang@spglobal.com
--Edited by Haripriya Banerjee,
haripriya.banerjee@spglobal.com
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