Investing.com - With the Organization of the Petroleum Exporting Countries preparing to meet later this week, analysts at Morgan Stanley said Tuesday that any coordinated action on cuts is unlikely.
Thursday’s bi-annual OPEC meeting is unlikely to end in anything other than a statement of support for the current condition of oil markets as recent price increases have reduced the urgency for intervention, the U.S. bank said.
After falling to three-year lows earlier this year, oil prices have rebounded and briefly rose above the $50 per barrel level last week, amid indications that the global glut weighing on the market since 2014 is starting to unwind.
Recent forecasts for a rebalancing in oil markets by 2017 and falling non-OPEC supply have also reinforced the currency policy stance, analysts said.
OPEC, whose members pump more than a third of world’s oil, is not expected to change its output quota of 31.5m barrels a day.
Morgan Stanley noted that Saudi Arabia’s comments on oil markets and OPEC’S role, as well as Iran’s production outlook and oil policy would be of particular interest.
Khalid al-Falih was appointed as Saudi Arabia’s new energy minister this month as Riyadh unveiled radical plans to overhaul the kingdom’s economy and dramatically reduce its dependence on oil.
The planned reforms, which include selling shares of the national oil company, Saudi Arabian Oil, or Aramco, represent a shift away from the kingdom’s commitment to OPEC and global oil markets towards domestic economic goals.
OPEC failed to reach an agreement on a production freeze with non-OPEC countries in April after Saudi Arabia, the world’s largest exporter, said it would not participate as long as Iran continued to raise its output towards pre-sanction levels.
Iran has repeatedly said it wants to return to output levels it had prior to Western sanctions over its nuclear program.
Morgan Stanley also said that low expectations and limited positioning ahead of the meeting suggested that any surprise could have an outsized impact, noting that implied volatility has fallen going into the meeting.