The oil price is edging lower again Wednesday. The move comes as OPEC and non-OPEC delegates have discussed the likelihood of extending the current output cap through to the end of 2018, ahead of the Nov 30 Vienna meeting.
However, it could be with the caveat to discuss it further at the June meeting, should prices overheat on the extension.
By 1345 BST, the price of Brent crude was 0.24% lower at $63.09 per barrel. The price of US WTI oil, was down 0.22% at $57.86 per barrel.
Technical meeting underway
Key decisions won’t likely be formally announced until Thursday November 30, when the leaders of each country get together. However, some country delegates are also meeting Wednesday to discuss which details could be agreed.
OPEC’s secretary general, Mohammad Sanusi Barkindo’s opening remarks ahead of the technical meeting Tuesday, meanwhile, further pressed home his support of the output cap.
“I want to congratulate everyone here on the one-year anniversary of the Declaration of Cooperation,” Barkindo said. “for the first time since the summer of 2014, all major crude oil benchmarks have flipped into backwardation, signalling clearly a market that is steadily returning to balance,” he added.
According to a Reuters report, a number of sources said a committee made up of some OPEC and non-OPEC members, made the recommendations to extend the output cap until the end of 2018. The cap is currently scheduled to end in March 2018.
However, they also suggested an option to review the agreement at the next OPEC meeting in June, should prices show signs of overheating.
Anything less will be a failure
However, with so much OPEC led support for maintaining the output cap until the end of 2018, anything less than that will be considered a failure by the markets and analysts.
With the main meeting yet to come, there is of course the possibility the cap extension won’t happen. But, given the market situation and OPEC’s support, it’s unlikely that will happen.