Opec’s meeting in Vienna: As it happened

Opec gathers in Vienna today for its 172nd ordinary meeting, where it discussed the possibility of extending the Opec and non-Opec oil production cuts. Here The National offered live updates from the meeting. A live stream of the meeting on Opec's website will be available here. 9.25pm: That's a wrap from us. You can read the full story on the agreement announced in Vienna here . __________ 8.15pm: Okay, finally, the Opec chairman, Saudi oil minister Khalid Al Falih, got to the podium to confirm what everyone had been expecting: a rollover of the deal on the same terms for nine months, through to the end of next March. He said they expect inventories to hit their target of dropping back to the historic five-year average by the end of this year, but they tacked on the extra three months to deal with any typical seasional build into next spring (he didn’t add the expectation of most analysts that supply will rise early next year as big projects come onstream in the US, Brazil, the North Sea and elsewhere). The most interesting element was confirmation that Opec and the other partner countries have agreed to work on making their framework permanent. Another move was the admission of Equatorial Guinea from the non-Opec column to the Opec column, as it has been accepted as a member. Mr Al Falih said Egypt and Turkmenistan had been talking about joining the non-Opec group but couldn’t at this time. They are keeping that option open, he said. The market had been expecting this result and priced in the possibility of a deeper cut, so down went Brent futures to $52.29 a barrel, off $1.67 on the day. __________ 7.15pm: They’re draggin’ this out... Anonymous delegates have been quoted saying Opec has decided to roll over the deal on previous terms for another nine months, but we haven’t heard yet about non-Opec producers and we haven’t got a definitive deal until the communiqué comes out. Meanwhile, the air has been let out of the market: Brent futures are down $1.40 at $52.75 a barrel. __________ 6.25pm: Long preambles from the co-chairs, the energy ministers from Saudi Arabia and Russia, talking about how the deal has worked, etc, the need for more action. Now back into closed session. Interesting point from Saudi Arabia’s Al Falih that they’ll look at deepening the strengthening the institutions that have been established with a view to an ongoing forum to deal with market imbalances and other issues. Maybe the start of an expanded group covering 55 per cent of the world’s oil production? Depends on how the next nine months-to-a-year goes, one would imagine. __________ 5.43pm: Novak is here Alexander Novak, Russia’s oil minister and effective leader of the non-Opec contingent, is in the ministerial room at Opec’s Vienna headquarters, looking up pensively at the big screen above the chairman’s chair. The Opec and non-Opec ministers will convene shortly and everyone is expecting a nine-month extension of the deal on current terms, but it ain’t over till the communiqué is issued (or leaked), to paraphrase Yogi Berra. __________ 4.55pm: No meeting just yet Vienna sources saying the Russian oil minister, Alexander Novak, is still ensconced in the Park Hyatt hotel. The Opec ministers are on bathroom break and will resume shortly. After they break they are due to meet with their non-Opec counterparts, so another couple of hours of deliberation before they tell us they’ve agreed to extend for another nine months, plus any surprise deetails. Brent futures are at US$53.43 a barrel, down 53 cents. __________ 3.58pm: Plans for US reserves Ahead of the Opec/non-Opec meeting today, the US announced plans to sell down half its strategic petroleum reserve (SPR). Would it factor into Opec's discussions? There were some inevitable headlines out there about the plan "undermining" Opec, etc, but the SPR sales have never in the past had much market impact because they are spread out over months; or years in the proposed plan. __________ 3.04pm: The Aramco angle The Wall Street Journal is speculating (paywall warning) that Saudi Arabia has been pushing the longer nine-month extension to support its efforts to sell off a small percentage of state oil company Aramco. But then the paper's sister company, MarketWatch, is also saying today's oil price drop is because Saudi oil minister has said deeper cuts won't be needed. A finely balanced strategy, no doubt. __________ 2.35pm: Crude drops down The meeting is still under way. Meantime, North Sea Brent crude futures have drifted down to US$53.61 a barrel, down 35 cents. “This was a perfect ‘buy the rumour and sell the news’ scenario,” says Naeem Aslam of the online brokerage thinkmarkets.com. “Traders have paid so much attention to one thing, which was the duration of the oil production cut. That is the least important thing in our eyes,” Mr Aslam adds. Some kind of “shock” other than a nine-month rollover would be required to push prices up above $60 a barrel, he reckoned, such as deeper short-term cuts, which might quicken the inventory decline (which has so far been in hard-to-track stocks, like those held offshore). __________ 1.00pm: The doors close Khalid Al Falih, Saudi Arabia’s energy minister and Opec’s effective leader, finishes his statement, the doors are closed and the ministerial meeting begins. “The main focus today is on the consolidation, strengthening, and accelerating of the process of rebalancing [the oil market], alongside the task of drawing down global inventories to the five-year average,” Mr Al Falih said. And so the meeting begins – due to finish about 3pm CEST (5pm Abu Dhabi time). __________ 12:34pm: Nine-plus-three Jamie Webster, a fellow at the Centre for Global Energy Policy, says he is stuck in the basement at Opec’s Vienna headquarters, with “a sea of bodies between me and the ministers”, who are now mostly at places in the horseshoe table room where their deliberations take place over the next couple of hours. “Nine-plus-three is still what they’re talking about,” said Mr Webster, referring to the deal thought most likely, where the previous deal terms will be extended through next March, with the option to renew for another three months at that time if called for. __________ 12:20pm: Taking shale into consideration This is the kind of thing the technical advisors will have been briefing the oil ministers. US shale oil (or “tight” oil) production is near its previous March 2015 record. (Courtesy of the Kuwaiti engineer Jefain Al Hajri.) #Shale oil production close to break the highest level was recorded in Mar-15. #OOTT #OPEC pic.twitter.com/yBQCXlbZLZ

— JEFAIN ALHAJRI (@JRJ_ALHAJRI) May 24, 2017 __________ 12:03pm: The US dollar is down and stocks are up as we head into the meeting __________ 11.55am: Show me the barrels The familiar face of Bob McNally, the president of the Rapidan Group and the author of a book on oil price boom and bust, says: “I think the market could live with a 9 or 12 month extension and then stock draws. It is getting to the point of ‘show me the barrels’, that’s what the market wants to see – the extension and then stock draws.” Mr McNally said Opec and the 11 countries that have joined it have shown admirable cohesiveness since oil prices early last year fell below $30 a barrel and focused the mind. He said there is a case for an “Opec 2.0”, whereby Opec and an expanding group of non-members form a permanent framework to manage oil market imbalances. “Oil markets are rarely in balance for very long, and in my view it is going to be an uphill battle,” he said. “But it has been a very smooth run up to this meeting, elegantly prepared, and expectations are high,” he told Eithne Treanor for Opec television. __________ 11.32am: Compliance so far The Opec deal has gone well so far since it was agreed to in December. The graphic below shows output (barrels per day, in thousands): __________ 11.29am: Ministers start to arrive Ministers are starting to arrive at Opec, with Angola’s minister of energy and water João Baptista Borges first through the doors. You can find a full schedule for the meeting here. Keep in mind that all times are in CEST, which is two hours behind the UAE. __________ 11.10am: Oil climbs to a high __________ 11.07am: Fuel is cheap Oh, and the US Energy Information department reminded us that petrol prices for US drivers heading into the "driving season" are the second-cheapest they've been since 2009. Crude oil stocks fell 4.4 million barrels but were still well above last year – 10 million barrels higher – despite declines in recent weeks. __________ 11am: Setting the scene for the meeting: • North Sea Brent crude futures settled on Wednesday at US$54.40, up 44 cents on the day. • Overnight, Goldman Sach's Middle East regional head Michele Della Vigna said in an interview with CNBC that an extension of nine months at unchanged quotas is priced into the market, though deeper cuts are a possibility to "surprise the market". Still, he stated a commonly held view that whatever Opec and its supporters do, the dominant factor through this year and into next will be US shale oil output, which fell last year by 600,000 barrels per day under the laissez-faire policy but has roared back since the Opec/non-Opec deal, and Goldman sees it rising by 900,000 bpd by the end of the year. • Arriving in Vienna for parallel talks to Opec’s, Russia’s oil minister Alexander Novak floated the idea of extending the deal by 12 months, through June of next year, which surprised a number of Opec ministers, including Iran’s energy minister, Bijan Zangeneh, who said he hadn’t heard that one before. __________ 10.45am: Good morning The meeting is set to begin in 30 minutes. Until then, you can read more of our coverage, including what to expect, here: • Committee recommends that Opec extend oil output cut deal by 9 months • UAE oil minister says Opec still to decide key output deal terms • Opec faces long road ahead to reach objective • Oil output cut set to soak excess by next year • Oil output deal "may go into next year" business@thenational.ae Follow The National's Business section on Twitter

Opec’s meeting in Vienna: As it happened

Opec gathers in Vienna today for its 172nd ordinary meeting, where it will discuss the possibility of extending the Opec and non-Opec oil production cuts. Here The National offers live updates from the meeting.