With speculation swirling over possible production freeze talks, OPEC on August 8 appeared to throw cold water on the idea, sounding an optimistic tone about the oil market, dismissing the recent price slump as "temporary," and declaring that higher demand is just around the corner.
The producer group did not entirely close the door on an output agreement, revealing in a news release that its member countries plan to meet next month on the sidelines of the International Energy Forum in Algeria to discuss oil market conditions, though analysts have been quick to dismiss the likelihood that such a deal could be agreed.
In the news release, Qatar energy minister Mohammed bin Saleh Al-Sada, who serves as OPEC president, attributed current low prices to weaker refinery margins, inventory overhang, and the UK's recent vote to leave the EU.
With major oil consuming countries seeing their economies improve and winter approaching in the Northern Hemisphere, oil demand will rise in the next two quarters, he said.
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"This expectation of higher crude oil demand in [the] third and fourth quarters of 2016, coupled with decrease in availability is leading the analysts to conclude that the current bear market is only temporary and oil prices would increase during the latter part of 2016," OPEC said.
ICE Brent futures have slid from their 2016 peak of more than $53/b in June to below $42/b last week, though they have since rallied slightly to surpass $45/b on August 8.
The Wall Street Journal had reported on August 5 that a production freeze deal could be mooted at the IEF meeting from September 26-28, citing unnamed OPEC delegates, but several analysts said their expectations are low for any action.
"Can't help but be skeptical on the resumption of this merry-go-round again after the January-April go-around," Wood Mackenzie analyst Ann-Louise Hittle said in a tweet.
Another analyst, who spoke on condition of anonymity, said: "As things stand, we wouldn't expect OPEC to substantially change course unless there is a significant deterioration in global prices."
The last time a major production freeze agreement was on the table, several OPEC members met in Doha in April along with a handful of major non-OPEC producers, notably Russia.
A deal to keep output at January levels fell apart at the 11th hour in acrimonious fashion with Saudi Arabia insisting that Iran -- which did not attend -- participate in any production agreement.
OPEC's regular June meeting also featured a game attempt by some of the producer group's more hawkish countries, such as Venezuela and Nigeria, to push an production deal, but ultimately none was agreed and OPEC continues to operate without an output target, which it ditched in November 2014.
Fundamentals in focus
Iran has said it would not be a party to any output constraints until its production reaches pre-sanctions levels. That could be achieved later this year, though analysts have said Iran could see difficulties in maintaining that level of output, given the lack of investment over the past few years.
Iranian oil production in July stood at 3.63 million b/d, flat from June, as output showed signs of plateauing, according to the latest S&P Global Platts OPEC production survey.
Sada, who hosted the Doha summit and is serving as OPEC president through this year, had said in the aftermath of that meeting's collapse that improving market fundamentals made any production freeze agreement unnecessary.
The OPEC president post serves as chairman of the group's ministerial meetings and rotates alphabetically among the member nations annually.
Prices are "heading in the right direction," Sada said in April, as crude futures had rebounded from their February nadir. "How long [the market] will take to balance itself, we are yet to see. It is certainly in the right direction."
On August 5, Sada was insistent that the fundamentals still appeared promising despite the recent price slide, noting declines in global crude production, supply outages and decreases in oil inventories, while world demand is increasing.
OPEC, which has its next regular meeting on November 30, said in its news release that it "continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market."