Investing.com – With the possibility of a concrete agreement between members of the Organization of Petroleum Exporting Countries (OPEC) to freeze output at Wednesday’s informal meeting off the table, investors are looking to see what type of communication materializes to measure the odds for a deal at the official OPEC meeting on November 30.
Neither Saudi Arabia nor Iran decided to wait to dash any hopes for a formal agreement to be reached on Wednesday afternoon when major oil producers meet at 10:00AM ET (14:00GMT).
Saudi energy minister Khalid al-Falih told reporters Tuesday that “this is a consultative meeting, while his Iranian counterpart Bijan Zanganeh insisted that it was “not the time for decision-making”.
Zanganeh did attempt to keep hopes alive for a deal at the next official meeting. “We will try to reach an agreement for November,” he said on Tuesday.
Analysts had already pointed out that markets should not expect much to be done at Wednesday’s meeting.
“Given that OPEC has failed to agree much of anything in the last 12 months, it seems unlikely that it will start now, though it could kick the oil barrel towards the November meeting,”
CMC markets’ chief market analyst Michael Hewson said in his outlook at the beginning of the week.
In a note to clients released on Monday, Morgan Stanley suggested too that the OPEC would opt to delay any decision until the next meeting.
“We expect OPEC to note how this meeting lays the foundation for a more constructive and formal discussion at the official November OPEC meeting,” these experts wrote.
Credit Suisse too suggested that that Wednesday’s gathering would serve as little more than a preparatory measure.
“As we see it, producers could at the very least announce (…) the specifics of the key proposal on the table, if they can agree to keep negotiations about the nuts and bolts of a deal alive,” these analysts said.
Going further, some experts point out that most OPEC members have no incentive to freeze or cut production.
“Indeed, most of OPEC and other major oil producers are preparing for a future of continued production expansion,” wrote expert Ellen R. Wald, Ph.D. in an analysis of their output intentions.
Morgan Stanley too noted this tendency in their report amid “reasons to be skeptical”.
“Many OPEC members have expressed plans to grow production,” they said.
“This doesn’t prevent a one-year freeze, but it runs counter to the effort,” they concluded.
While market participants waited for the International Energy Forum to wind down and looked forward to any possible comments on the results of negotiations within OPEC, oil prices were trading higher on Wednesday after data from late in the prior session from the American Petroleum Institute showed a surprise draw in U.S. crude stockpiles.
U.S. crude oil futures gained 0.60% to $44.94 at 4:07AM ET (8:07AM GMT), while Brent oil rose 0.71% to $46.85.
The Energy Information Agency will release the official data at 10:30AM ET (14:30GMT) with consensus expecting inventories to drop by 14,000 barrels.