OPEC Predicts Higher Oil Production in Russian Federation

“While there may well still be an OPEC deal outcome in Vienna this month, it is expected to fall short of what is required to really kick-start the rebalancing process”, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

OPEC officials said in September that the group would aim for a combined output of 32.5-33 million barrels per day. Monday’s price action suggest December WTI crude oil may have reached a short-term bottom so don’t be surprised by a 2 to 3 day rally especially since the last trading day for the current active WTI futures contract is expiring next Monday.

Shares of Chesapeake Energy Corporation (NYSE:CHK) surged 3.04% and to closed at $5.59.

In fact, oil production estimates by the cartel’s six biggest members – Saudi Arabia, Iraq, Iran, Kuwait, the United Arab Emirates and Venezuela – were a combined 1.1 million barrels a day above independent estimates in October, according to OPEC’s monthly oil-market report released Friday. The deal is expected to help with the global oil glut problem that has been weighing on oil prices for about two years.

Any agreement to cut output and support prices would now be seen by some OPEC members as a victory for USA shale producers, BMI said.

“The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting”, an OPEC source said.

It further said: “Unfortunately for those seeking higher prices, an analysis of the other components provides little comfort”, IEA added, highlighting that output was increasing in Russia, Brazil, Canada and Kazakhstan. A surge in West Texas Intermediate short positions, or wagers the USA benchmark crude will decline, helped send the resulting net-long position to the biggest slump since May 2012 in the week ended November 8, Commodity Futures Trading Commission data show.

The oil market is “pretty pessimistic” about OPEC reaching a deal to cut production, BP Plc Chief Executive Officer Bob Dudley said. Lower crude oil prices suppressed exploration and production activity, but some recovery has emerged in the latter half of the year.

Supply and demand remain among the most influential components of oil-market behavior.

Russian Federation will hold informal consultations with representatives of some OPEC countries at the Gas Exporting Countries Forum in Doha on November 17-18, the Energy Ministry in Moscow said in a statement Tuesday.