The Secretary-General of OPEC just said he doesn’t see oil the price of oil declining further.
In an interview on Bloomberg TV at Davos, Abdalla El-Badri said that he thinks the oil price has bottomed out: “The price will not go to $US20 or $US25, I think the price will stay at where we are now. We have seen this before — prices coming down very fast and go up very slow. But prices will rebound.”
However, he also said that the cut in production to stem the collapse won’t come from OPEC. “Producers outside the Organisation of Petroleum Exporting Countries should be first to reduce their output amid a surplus that’s pushed crude below $US50 a barrel,” according to Bloomberg.
This is in line with the current generally accepted narrative about what’s going on in the oil market: Saudi Arabia — OPEC’s most powerful member — wants to protect its market share, and it’s willing to suffer through low prices for quite a while in order to smoke out the competition.
In the case of the US, it’s working.
That said, this seems to be a bit of a wink in the direction of OPEC stepping in to help stop the price collapse. It doesn’t seem like they are quite ready to do anything, and this doesn’t contradict the comments in the last couple of months by Saudi Arabian Minister of Petroleum Ali Al-Naimi that OPEC is going to let the market control prices.
But it is an indication that they would like the price to at least steady a bit, which is the first step. It will be interesting to see how the market reacts.