27 November 2014 | 12:40

OPEC mulls oil supply glut weighing on crude prices

OPEC ministers met Wednesday to try to work out a deal to tackle rising oil supplies that are weighing heavily on crude prices and the cartel's revenues, AFP reports.

"All the experts in the markets believe that we have an oversupply on the market and next year we will have more oversupply," Iran's Oil Minister Bijan Namdar Zanganeh said, ahead of a pivotal OPEC policy meeting in Vienna Thursday.

Oil prices were steadier Wednesday after tumbling the day before when the US benchmark hit a four-year low on expectations that the Organization of Petroleum Exporting Countries will not agree to cut its official output ceiling.

But there were signs Wednesday that it was working towards some sort of deal on output.

OPEC kingpin Saudi Arabia said Gulf nations had reached a consensus over what needed to happen.

"The power of convincing will prevail tomorrow I hope and we will take a unified position and I am confident that OPEC is capable of taking a very unified position," Saudi Oil Minister Ali al-Naimi told reporters.

Thursday's OPEC meeting is the most significant in recent years after crude futures have sunk by more than 30 percent since June on plentiful oil supplies, a strong dollar and worries about stalling energy demand in a weak global economy.

The 12-nation cartel, which pumps out about one-third of the world's oil, is under pressure from its poorer members like Venezuela and Ecuador to cut output as tumbling prices have slashed their precious revenues.

However the cartel's Gulf members have rejected calls for a cut unless they are guaranteed market share in the highly competitive arena.

"It is very important for us to have unity inside OPEC," Zanganeh told reporters after pointing to "a very good discussion" with Naimi in the Austrian capital Wednesday.

"We didn't discuss only about the (possible) cut, but (also) the market situation and our positions are close to each other," the Iranian added.

OPEC seeks outside help

Zanganeh added that it was not solely up to OPEC to tackle the oversupply that is sending crude prices crashing, benefitting consumers at the petrol pumps but hurting oil companies' incomes.

"To deal with this situation we need to have a contribution from non-OPEC producers for managing the market," he said on arrival in Vienna, where the cartel is headquartered.

Ahead of the OPEC meeting, the world's top oil producer Saudi Arabia has cut charges for US customers, in a move seen as a bid to maintain its market share amid increasing competition from oil extracted from shale rock in the United States.

Officials from Saudi Arabia met with their counterparts from Venezuela and non-OPEC oil producers Russia and Mexico in Vienna on Tuesday.

Following the surprise gathering, Russian oil giant Rosneft said it had trimmed its daily output by 25,000 barrels because of "market conditions".

The token reduction represented less than one percent of the behemoth's total and did nothing to boost energy prices on depressed global commodity markets.

The key US oil futures contract, West Texas Intermediate (WTI) for delivery in January, was down 41 cents at $73.68 a barrel in trading Wednesday.

OPEC pumping above target

OPEC pumped 30.6 million barrels per day last month, above its 30 million bpd target, according to the International Energy Agency, which advises countries on energy policy.

Some analysts believe that the cartel will on Thursday agree to trim such excess rather than cut its official ceiling.

"There remains little prospect of any production cut being agreed at tomorrow's OPEC meeting," Commerzbank analysts said in a note to clients Wednesday.

"We believe... that OPEC will merely agree tomorrow to comply better with the current production target of 30 million barrels per day."

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