OPEC to try again for more market discipline

Bloomberg/Fuel Fix:
OPEC may turn its planned informal meeting in Algiers next week into a formal session as it seeks ways with other producers to cut crude supplies by 1 million barrels a day to re-balance markets and stabilize prices, Algerian Energy Minister Noureddine Bouterfa said.

OPEC will hold an informal meeting after the closing session of the International Energy Forum conference in Algiers on the afternoon of Sept. 28, Bouterfa said on public radio. Depending on discussions until then or even during the informal session, OPEC ministers, since all will be present, can transform the gathering into an extraordinary meeting, he said.

Oil has fluctuated since August’s rally on speculation that the Organization of Petroleum Exporting Countries and Russia will agree next week in Algiers on a strategy to support prices amid an oversupply. OPEC’s 14 members are pumping more than 33 million barrels a day, and inventories will grow even more if no action is taken, Bouterfa said.

“The question is at what level we would freeze or reduce output — we need to find the good compromise in order not to destabilize the market,” Bouterfa said. “It’s necessary at least to reduce by 1 million barrels a day to re-balance the market. Will we get there? We are working for that.”

OPEC, which supplies about 40 percent of the world’s oil, plans its talks on the sidelines of the International Energy Forum in Algiers as the persisting glut weighs on prices. The group’s members are close to a deal, according to Venezuelan President Nicolas Maduro, while OPEC’s secretary-general said an extraordinary meeting is possible if ministers reach a consensus. Benchmark Brent crude was down 1.5 percent at $45.27 a barrel at 5:33 p.m. in Dubai.
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OPEC's problem is that they have lost their biggest customer, the US and they do not have the market discipline to control the price with their shrunken share of the market.   Pumping more oil to try to fight for market share has been a loser for most of the countries within OPEC.

Its members keep saying they are going to cut back on production to try to balance supply with the demand side, but they no longer seem to have the ability to do that.  There attempt to try to drive the American producers out of business has been largely a fail, because of increased efficiency and concentration on areas where the cost is less.

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