OPEC and non-OPEC countries are again flirting with the idea of a production freeze to accelerate oil-market rebalancing, according to recent statements by several oil ministers.
John Kemp is a Reuters market analyst. The views expressed are his own.
LONDON, Aug 16 (Reuters) - OPEC and non-OPEC countries are again flirting with the idea of a production freeze to accelerate oil-market rebalancing, according to recent statements by several oil ministers.
"Rebalancing is already taking place," Saudi Energy Minister Khalid Al-Falih observed in comments published on Saturday, which had already leaked on Thursday.
"We are on track and prices should reflect that," the minister explained. Current prices were unsustainably low and the minister blamed the "large short positioning" in the oil market for causing prices to "undershoot".
"We are, in Saudi Arabia, watching the market closely, and if there is a need to take any action to help the market rebalance, then we would, of course in cooperation with OPEC and major non-OPEC exporters."
"We are going to have a ministerial meeting of the International Energy Forum in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market."
Falih's comments essentially repeated the position Saudi policymakers have taken for the last two years since prices began to tumble in 2014.
But the unusually detailed statement and its timing has been interpreted by some observers as indicating an increased willingness to reach an agreement.
Statements from other energy ministers, including Russia, have added to speculation about an imminent deal ("OPEC deal a tough task, as oil output freeze expectations rise", Reuters, Aug. 15).
The prospect of an output freeze has added fuel to a short-covering rally that had already started at the beginning of August ("Hedge funds add bullish positions as oil short-covering rally starts", Reuters, Aug. 15 ).
Deal or No Deal
Falih's comments have launched another round in the now familiar game in which oil experts try to predict whether OPEC and non-OPEC countries will reach an agreement to boost prices.
Previous attempts to reach a deal on cutting or even just freezing production at OPEC meetings held in November 2014, June 2015, December 2015 and June 2016 all ended in failure.
An effort to reach an agreement between major OPEC and non-OPEC exporters on a production freeze at a summit hosted by Qatar in April 2016 also ended without agreement.
But the recent comments from Saudi Arabia have sent oil traders, analysts and journalists scrambling to predict whether it will be sixth-time lucky.
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