OPEC freeze at today’s levels not good enough, Vitol chief says

Javier Blas, Guy Johnson 9/28/2016

LONDON (Bloomberg) -- A move by the Organization of Petroleum Exporting Countries to freeze output won’t be sufficient to buoy the market, according to the world’s largest independent oil trader.

Capping production at today’s levels is “probably not quite good enough,” Vitol Group of Cos. CEO Ian Taylor said in a Bloomberg Television interview as OPEC members gathered in Algiers on Wednesday. The organization may need to tighten supply further to drive up prices, a task that could be “too much to grasp at this particular meeting,” he said.

Major oil-producing nations will meet in the Algerian capital to discuss ways to stabilize the market following a two-year slide in the price of crude. While Saudi Arabia has offered to pump less oil if regional rival Iran caps output, neither country expects a formal agreement this week, suggesting a deal is more likely at OPEC’s next gathering in November.

“For all the OPEC countries the price of oil is very low,” Taylor said in an earlier interview at the Bloomberg Most Influential summit in London. “It’s a struggle for them.”

Benchmark Brent oil is trading below $47/bbl in London, less than half its value two years ago amid a persistent global glut.

“I cannot see a good reason for a major increase in the price of oil” since the market remains “way oversupplied,” Taylor said. Crude may move “closer to $55” by the end of 2017 as producers reduce investment in maintaining supply and fields age, he said.

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