An Opec deal to cut oil output at a meeting this month is looking increasingly unlikely, with failure warranting prices in the low-$40s. “The lack of progress on implementing production quotas and the growing discord between Opec producers suggests a declining probability of reaching a deal on November 30,” Goldman analysts including Damien Courvalin wrote in a note dated October 31. Obstacles to a supply agreement remain formidable, Greg Sharenow, a Pimco portfolio manager, said in an e-mailed note on Tuesday.
The Organization of Petroleum Exporting Countries is due to meet in Vienna to implement the first supply cuts in eight years and get other producers from outside of the group to join, notably Russia. “The lack of an agreement so far has pushed oil prices sharply lower, with weakening oil fundamentals warranting oil prices in the low $40s a barrel in our view if Opec is unable to deliver a convincing agreement,” the Goldman analysts wrote.
Sources: QGN, Reuters, OPEC News.