Despite the desperate headline-grabbing jawbone attempts (from Oman's delegate more than others), WTI Crude prices are tumbling from earlier highs as day one of the OPEC+ meeting ends without a firm commitment to further production cuts.
The meeting of Saudi Arabia, Russia and other members of the OPEC+ group recommended a production cut, without a formal agreement on how much oil should be removed from the market.
Keeping track of the constant barrage of OPEC headlines was farcical today:
*NIGERIA OIL MIN: OPEC+ SHOULD CUT OUTPUT, NO GROUP DECISION YET
*OPEC+ AGREES TO RECOMMEND A CUT: OMAN ENERGY MINISTER
*OMAN MINISTER SAYS OPEC+ HAS CONSENSUS FOR OIL PRODUCTION CUT
*RUSSIA HAS AGREED TO OIL OUTPUT CUT: OMAN MINISTER
All sounds very bullish - except nothing was agreed at all as the Russian delegate confirmed, talks with fellow OPEC+ members were constructive but the result will be discussed at the OPEC conference in Vienna on Thursday. Any concrete moves will depend on the outcome of that meeting, the delegate says, asking not to be named because the talks were private.
Most likely for now is what Putin mentioned - an extension of the current production cuts. Additionally, Russian excuses have already begun, as Lukoil CEO Vagit Alekperov says in Vienna, that they may not be able to cut production immediately because the winter season makes it difficult to do so:
“The only limitation we have is weather, the cold climate in Siberia. We probably won’t be able to cut down immediately but within certain period of time we will meet the needs, the quota”
And uncertainty remains:
*ECUADOR OIL MIN SAYS OPEC+ CUT IS NEEDED, DOESN'T KNOW SIZE
*OMAN OIL MIN: OPEC+ COMMITTEE DIDN'T DISCUSS SIZE OF OUTPUT CUT
But, once that same Omani delegate suggested that the cuts - which have not been agreed - could be 1mm b/d only, crude prices began to tumble.
Expectations are for a cut of 1m-1.3m b/d, B. Riley FBR Chief Market Strategist Art Hogan says at Energy CFO Roundtable in Houston.
If daily output is only curbed by 750k b/d or less, the market will “come down”
“I don’t think this is a Saturday night massacre kind of thing that we went through in 2014 when we expected a cut and we didn’t get it...Saudi Arabia needs higher prices, for sure. As does Russia”
OPEC+ delegates know the stakes are high after prices suffered their largest monthly drop since the financial crisis in November, and weren't helped by President Trump's resumption of public pressure on the cartel, saying in a tweet that the “world does not want to see, or need, higher oil prices!”