• Monday, May 20, 2024
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Crude oil to fall to $60 without OPEC cut

Nigeria Oil and gas industry

Analysts believe oil prices could slide to $60 per barrel if OPEC does not agree a significant output cut when it meets tomorrow in Vienna.

Oil prices have been falling since the summer due to abundant supply, partly from US shale oil, and because of low demand growth, particularly in Europe and Asia. As a result, some investors believe a small cut of around 500,000 bpd would not be enough to calm the markets.

With member states struggling to balance budgets, many OPEC countries will be pushing for an output cut when OPEC meets in Vienna tomorrow.

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“A surprise significant cut, say of 2 million bpd, is needed to push prices back up to $80. And that would have to be accompanied by some newfound discipline in the non-Saudi members,” analysts said.

The market has been awash with conspiracy theories as to why Saudi Arabia has not already intervened. The market really wants to see that OPEC is still functioning; if there is a small cut, with an accompanying statement of coherence from OPEC that presents a united front, and talks about seeing demand recovery, and some moderation of supply growth, then Brent could move up to $80-$90.