- Title: Oil jumps 8 percent on prospects for big OPEC output cut
- Date: 30th November 2016
- Summary: LONDON, ENGLAND, UNITED KINGDOM (NOVEMBER 30, 2016) (REUTERS) (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "We've seen in very early trading oil up five per cent on the expectation that a deal may be forthcoming, on comments that a deal may be forthcoming. Why are markets so reliant on this? Because they still see the market left to its own devices not rebalancing until the end of 2017, the start of 2018. And therefore it will be material action from OPEC to cut production that will bring the market into balance sooner and push oil above 50 (dollars per barrel) and towards 60, the kind of level that a lot of the OPEC producers both want and need." (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "I think the same problem occurs today as occurred back in Algeria and also earlier in the year at their earlier Vienna meeting, which is, of this 500,000 barrel a day cut, which country is going to step up, which countries are going to step up and take their share of the pain? It is unclear that Saudi is ready to be the swing producer and I'm quite sceptical as to whether we'll see a deal that will hold coming out of today's meeting."
- Embargoed: 15th December 2016 11:49
- Keywords: OPEC Oil Iraq Saudi Arabia oil prices oil production
- Location: VIENNA, AUSTRIA/ LONDON, ENGLAND, UNITED KINGDOM
- City: VIENNA, AUSTRIA/ LONDON, ENGLAND, UNITED KINGDOM
- Country: Various
- Reuters ID: LVA0035AMXPAF
- Aspect Ratio: 16:9
- Story Text: Oil prices jumped more than eight percent on Wednesday (November 30) as some of the world's largest oil producers gathered in Vienna to agree on a production cut that could be bigger than expected.
The Organization of the Petroleum Exporting Countries (OPEC) started a meeting at 0900gmt at its Vienna headquarters to discuss terms of a potential deal to cut production in an effort to prop up prices that have fallen by more than half since 2014 due to oversupply.
A source told Reuters that delegates were now discussing a bigger than expected cut in production of 1.4 million barrels per day (bpd).
OPEC is close to clinching a deal to limit oil output, according to Saudi Energy Minister Khalid al-Falih who spoke to Reuters in a text interview. He said that Saudi Arabia will take a "big cut" in its production levels.
In an opening statement in Vienna, OPEC President, Dr. Mohammed Bin Saleh al-Sada said it was vital that oil stock levels start to fall to bring more stability to the market.
The 14-country OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up oil prices, which have halved since mid-2014.
Chief economist of corporate investment banking company Panmure Gordon, Simon French, said oil prices had jumped because the markets cannot rebalance in 2016 without OPEC action.
"It will be material action from OPEC to cut production that will bring the market into balance sooner and push oil above 50 (dollars per barrel) and towards 60, the kind of level that a lot of the OPEC producers both want and need," he said.
He said one element which could prevent a deal from happening was which countries would accept reducing their output. He questioned if Saudi Arabia was ready to be the "swing producer" to bring down production.
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