If the OPEC members were to agree for a global oil output cut of one million barrels per day (mbd) in their meeting today, that may not be enough to assuage markets that it will take a bit out of the surplus and may prompt a further sell off in crude, Emirates NBD noted in its report on Thursday.
OPEC is holding its biannual meeting today and market focus will be on whether it can agree to cut production and also encourage producers such as Russia to participate in the cuts, the report added.
“OPEC’s current production levels will leave the market heavily oversupplied, particularly in Q1 next year, if there were to be maintained yet achieving consensus among members to share out a cut still appears a considerable challenge,” the report added.
Emirates NBD report said OPEC may decide to cut back output from October 2018 levels.
“While the cut could help shore up near term confidence in oil markets it would still be from an extremely elevated baseline and would need substantial declines from other producers to make a significant impact on balances next year,” it added.