Saudi Arabia’s energy minister is “optimistic” OPEC will reach a deal to cut output and said that a production ceiling of 32.5 million barrels a day would speed the balancing of supply and demand for oil. His Algerian counterpart said the group is near a consensus on capping production for at least six months.
Crude prices rose as the emphasis on a 32.5 million-barrel limit stoked concerns that the Organization of Petroleum Exporting Countries could cut output more than markets expected. OPEC pumped 33.6 million barrels a day in October.
The group’s members will meet this month to finalize an agreement to rein in oversupply and buoy prices. They agreed initially in September in Algiers to cut their collective output to 32.5 million to 33 million barrels a day.
“I am still optimistic that the agreement reached in Algiers to put a ceiling to production will be implemented by adopting ceilings for countries,” Saudi Arabian Minister of Energy and Industry Khalid Al-Falih said in an interview on Saudi-owned Al Arabiya television. “Reaching the 32.5 million ceiling will help speed up recovery, and will be in the interest of the producers and the consumers.”
OPEC has been trying to persuade suppliers from outside the 14-member group to join the cuts, having met with producing nations including Russia. OPEC’s Secretary General Mohammed Barkindo has said he is confident that its decision to limit the group’s output will reduce inventories and bring forward a balancing of the crude market.
“The general message seems very consistent with previous statements on their desire to run down inventories quicker, but the reference to 32.5 was the new element,” said Paul Horsnell, head of commodities research at Standard Chartered Bank.
Crude in New York trading was up 53 cents a barrel to $46.10 shortly before 8:30 a.m.
About 11 countries would participate Friday in “informal and consultative” discussions in the Qatari capital on Friday, Mohammed Al Sada, Qatar’s Energy and Industry Minister, told reporters in Doha. Al Sada didn’t identify the countries.
The group is working on an output deal that would last for six months or possibly a year, with a revision after the first six months, Algerian Energy Minister Noureddine Boutarfa said in Doha. “That’s the proposition that apparently has consensus,” he said.
OPEC’s 14 members, which supply about 40 percent of the world’s oil, will meet in Vienna on Nov. 30. Iraq and Iran are seeking exemptions from any cuts.