OPEC likely to keep output unchanged at June 5 meeting

VIENNA — The Organisation of Petroleum Exporting Countries (OPEC) is likely to keep its output target unchanged when it meets on Friday because the global oil market appears to be in good shape and prices are expected to firm up from current levels, a senior Gulf OPEC delegate told Reuters.

Two more OPEC delegates expect no change in policy on June 5 when OPEC oil ministers are scheduled to meet in Vienna.

Oil prices have rallied after falling to a near six-year low close to $45 a barrel in January due to a global glut. Brent crude settled at $65.56 on Friday, up $2.98, or 4.8 per cent, on the day.

"It is unlikely that OPEC will make a decision regarding its production ceiling for two reasons: The first one that Russia and other non-OPEC producers have expressed their non-desire to cooperate in any idea of a production cut," the Gulf delegate said on Sunday.

"And the second one is that the market is firming up. Prices are expected to continue at current levels and most likely will go higher. Demand is also strong and the inventories are balanced. The market seems to be in good shape," the delegate indicated.

Crude oil inventories are above the five-year average but oil products stocks are within the five-year average, the delegate added.

"At the end, of course the final decision will be made by the ministers when they meet," the senior Gulf delegate continued.

Two officials from other OPEC producers made similar remarks.

"I don't think there will be any changes," said an official from an African OPEC member, referring to OPEC's output policy decision on June 5.

"Prices ... are within $60-$65, at least they are improving from where they were at before," another Gulf OPEC delegate said. "There is still an oversupply in the market, but the oversupply is less than what it was in November."

OPEC refused to cut output to shore up prices at its last meeting in November despite the glut, seeking to defend market share against higher-cost producers such as the United States. It left its output target at 30 million barrels per day.

The decision exacerbated the price fall from as high as $115 in June 2014.

However, early signs of slowing production in the United States and higher-than-expected growth in demand have helped drive the rally in prices from January's low.