(Bloomberg) -- OPEC will stick with the strategy of favoring market share over prices when it meets next month because rival producers are already starting to buckle.
All but one of the 34 analysts and traders surveyed by Bloomberg said the Organization of Petroleum Exporting Countries will maintain its daily production target of 30 million barrels when it meets in Vienna on June 5.
Saudi Arabia, the biggest of OPEC’s 12 members, shaped the strategy at the last meeting in November, arguing that the usual response of cutting output to boost prices would not address the threat from shale and other higher-cost suppliers. Prices rose by about $20 since mid-January as producers cut spending plans and the number of active U.S. drilling rigs fell by the most ever.
“Dramatic cuts in spending and drilling are finally having an impact, so why on earth would Saudi Arabia change course now their strategy is just starting to bear fruit,” Mike Wittner, head of oil research at Societe Generale SA, said by phone from New York on May 19. “Anyone who expects anything to happen at this meeting is going to be sorely disappointed.”
Brent crude, an international benchmark, traded at $66.32 a barrel at 9:19 a.m. London time. While that’s 43 percent below last year’s high, it’s 47 percent more than the low reached Jan. 13.
OPEC’s 12 members pumped about 31.2 million barrels a day of crude in April, almost 3 million a day more than the average amount the world requires from the group this quarter, according to the Paris-based International Energy Agency.
While some members, such as Iran and Venezuela, said they opposed the Nov. 27 decision to maintain production, several OPEC officials have signaled this month that the group will continue with its current course. Iranian Deputy Oil Minister Roknoddin Javadi said on May 18 that that the existing production target is appropriate.
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