Post OPEC's chaotic Friday meeting in Vienna, it looks like Saudi Arabia is content to maintain its policy of pumping oil at near record levels until rivals -- external, such as Russia and U.S. shale drillers, as well as internal -- are squeezed out of market share. Notably, the ceiling of 30 million barrels a day, in place since 2011 has now been abandoned. According to Bloomberg data, OPEC output has outstripped the 30 million mark for 18 consecutive months. Interestingly, OPEC says it will keep pumping as much as it does now -- about 31.5 million barrels a day -- effectively endorsing limitless output. Based on these comments, it looks like the OPEC cartel is effectively dead, and won't be going back to the days of setting production ceilings and working against customers. The main takeaway from OPEC's Friday meeting is that oil prices will clearly be heading lower in the near term, but the big question remains for how long......? Factoring in the global oil supply glut and slowing demand in China, somewhat offset by high global decline rates and billions in capital that's been removed from the system, oil prices are likely to remain low for a least the next 6-12 months.
A Canadian Energy expert