OPEC Seen Holding Oil Output to Defend Market Share

LONDON (AFP) - OPEC, keen to defend its market share against the US shale oil boom, is expected to hold output levels steady at its Vienna meeting this week, analysts say.

Date: 01 June 2015 - 21:50

News ID: ۱۴۵۵۱

The influential 12-nation Organization of the Petroleum Exporting Countries (OPEC), which pumps about 30 percent of the world's oil, will make the decision Friday at its semi-annual production meeting in the Austrian capital.
Persian Gulf members, led by cartel kingpin Saudi Arabia, will probably resist calls to cut output as they seek to safeguard their share of a market that is plagued by a vast supply glut -- fuelled partly by the boom in shale oil.
"OPEC is likely to confirm its output target of 30 million barrels per day given that its strategy of defending market shares is bearing fruit," said Commerzbank analyst Carsten Fritsch.
"The rapid rise in US crude oil production has been stopped and the oil price has recovered considerably since February."
In recent weeks, oil prices have fought back after the market plunged 60 percent between June and January on the back of abundant supplies.
OPEC refused in November to cut its official daily oil output target of 30 million barrels -- where it has stood for more than three and a half years -- despite the glut.
The move, which sent prices sliding further, was widely regarded as a tactical attempt to boost demand and hurt non-OPEC output, particularly US shale producers which have higher costs.
"The OPEC meeting... is expected to result in a continuation of the status quo -- with no change to the 30 mbpd quota," agreed Citi analyst Seth Kleinman.
While higher prices boost producers' revenues they can also weigh on demand -- and in turn economic growth -- harming the cartel in the long run.
However, faced with a precipitous slump in their earnings, some OPEC members -- led by Iran and Venezuela -- have publicly urged the cartel to cut production to support prices.
In Monday morning trade, the oil market slid on renewed supply glut concerns ahead of the OPEC gathering.
US benchmark West Texas Intermediate (WTI) for July delivery dropped 59 cents to $59.71 per barrel, while Brent for July shed 63 cents to $64.93.