OPEC meets on Thursday
There are two questions heading into this weekend for OPEC: What's needed? And what's expected?
The meeting takes place Thursday, Dec 6 in Vienna. Qatar quit OPEC today in a sign of some of the strife within the organization. At the same time, reports say the other members and Russia are working towards cuts and Qatar's oil production is minimal.
UBS estimates that a reduction of 1.4 million barrels per day will be needed to balance the market for 2019. At the same time, they say that short-term sentiment is likely to be positive on any move.
"Regardless of volume and timing a cut announcement will be positive for sentiment in it will be a strong signal that OPEC intends to defend the oil price," wrote UBS analysts today.
Barclays reaffirmed a $72 target price for Brent at the end of 2019, up from $62 currently.
"In our base case, we expect the elegant solution that would exclude Iran and Venezuela from the cuts and allow Saudi Arabia and the other flexible producers to cut output in line with the individual country allocations. The extent of the cut would depend on which recent month, or possibly three months, that the group chooses as its baseline," they write.
In the bigger picture, they say that the drivers of the oil price decline have been Iranian waivers and macro gloom. In particular, they say specs were driving up the price of oil ahead of Iran sanctions and covered afterwards.
The consensus of forecasters surveyed by Bloomberg is a cut of 1.1 mbpd.
