Authored by Nick Cunningham via OilPrice.com,
The latest OPEC meeting was uncharacteristically tranquil, with little of the eleventh hour infighting and arm-twisting that has been so prevalent in previous meetings. The cooperative spirit has allowed OPEC to roll over its production cuts for another nine months, as expected, a move that has to be described as a successful outcome. “Nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick,’ Saudi energy minister Khalid al-Falih told reporters.
Yet the oil markets are unimpressed. Crude prices dropped on Thursday as it became apparent that a much more aggressive move – a lengthier extension or deeper supply cuts – was off the table. For OPEC, the price reaction is surely frustrating. Keeping so many oil producers on board with a plan that requires significant sacrifice has always been a monumental task, not least because many of the countries involved seriously distrust one another. More importantly, they are extending the cuts for another nine months, longer than anyone expected up until just a few weeks ago.
This post was published at Zero Hedge on May 26, 2017.
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