After touting for weeks the “sizeable” production cuts that would drive oil prices back to appropriate levels, OPEC officials were obviously disappointed by the immediate results of the Oran meeting. With the February oil futures contract trading as high as $54 just before the meeting and closing the week at $42.36, the announcement clearly did not deliver the desired results.
Officials strived to put a good face on the market responses, reiterating that a 2.2 million barrel cut was enough to balance the market and that it will be necessary to wait until January 1st , when the cuts become effective to see results from actions taken. OPEC’s Secretary General El-Badari indicated that the cartel had about 60 percent compliance with the October 1.5 million b/d cut during November.
On Friday, OPEC’s President Chakib Khelil told reporters at an energy conference in London that the cartel will continue to cut production as much as necessary to stabilize prices. Khelil indicated that OPEC still believes the demand for oil will continue to fall and that the group may meet in Kuwait on January 19th to discuss further production cuts.