Outcome of OPEC+ meeting uncertain – Commerzbank

Carsten Fritsch - Analyst Energy, Agriculture, Precious Metals at Commerzbank - offered a brief preview of the OPEC+ meeting on Wednesday to decide the production volume for September. The markets expect a further gradual increase of the production targets, which should help crude oil prices to stabilise.

Key Quotes:

“The noticeable price slide since yesterday could make OPEC+ more cautious because it was attributable to renewed demand concerns in the wake of disappointing economic data from China, the world’s second-largest oil consumer country. The news that oil production in Libya has regained its normal level for the first time in nearly four months could also argue against any further expansion of production. After all, this will see around 600,000 barrels per day of Libyan oil return to the market – oil that was still missing in June and July.”

“That said, in its July monthly report that is based on oil production in June, OPEC is still predicting a supply deficit of more than 1 million barrels per day in the second half of the year. Only if it turns out that OPEC+ stepped up its oil production by around 650,000 barrels per day as planned in July and August, and if Libya maintains its oil production at a constant 1.2 million barrels per day until the end of the year – both of which are very unlikely given what we have seen in recent months – would the oil market be sufficiently supplied.”

“We therefore find the outcome of the OPEC+ meeting impossible to predict, though there is more to suggest that the current production volume will be left unchanged, which should help prices to stabilise.”