OPEC 'rolls over' 30m bpd quota, welcomes back Indonesia

The Organization of Petroleum Exporting Countries rolled over its oil production level, which was last set at 30m barrels per day, but declined to offer an exact figure on Friday, at the conclusion of its oil ministers' summit in Vienna, Austria.

Secretary General Abdalla Salem El-Badri said, "OPEC will wait and see how the market develops over the next six months and saw no need to alter the current production level during a period of market adjustment."

In wake of the OPEC announcement, at 1656 GMT, WTI was trading at $40.47 per barrel, down 61 cents or 1.48%, while Brent came in at $43.52, down 32 cents or 0.73%. Industry surveys suggest OPEC's production for November was at 32.1m bpd, well in excess of stated levels.

Earlier, Indonesia, a net oil importer, was readmitted to OPEC having reactivated its membership which had been suspended at its own request in 2009.

Despite repeated questioning on the quota ceiling, El-Badri said Indonesia's re-entry into the OPEC fold, possibility of additional Iranian barrels entering the market and an evolving macroeconomic climate meant putting a figure was not feasible.

"Since our last meeting in June, oil and product stock levels in the OECD have continued to rise. The latest numbers see OECD and non-OECD inventories standing well above the five-year average."

"Having reviewed the oil market outlook for 2015, and the projections for 2016, we observed that global economic growth is currently at 3.1% in 2015 and is forecast to expand by 3.4% next year." In terms of supply and demand, OPEC noted that non-OPEC supply is expected to contract in 2016, while global demand is anticipated to expand again by 1.3m bpd.

El-Badri said OPEC would continue to "closely monitor" developments in the coming months.

Jason Schenker, President of Prestige Economics, said, "Unsurprisingly, there was no change in OPEC's stance given the current market dynamic with short-term bearish implications for the market. I was never convinced OPEC would cut, and to be honest, its unlikely to for another six months."

Schenker also dismissed the market rumour mill in favour of OPEC coordinating its policy on production with non-OPEC heavyweights such as Russia. "They might meet to discuss market direction. However, a joint policy on production levels would be stretching it too far."

Commenting on the decision, Andy Brogan, Global Oil & Gas Transactions Leader at EY, said the oil and gas sector should brace itself for even tougher days ahead. “Despite some softening in rhetoric, OPEC members have once again demonstrated that they will seek to defend market share. Despite the strain on government revenues, they have agreed to maintain production.

"Furthermore, the return of Iranian crude to the market will add to the current supply overhang and prolong oil price volatility. It means oil and gas companies will continue to face difficult decisions as they try to strengthen margins and improve returns in an uncertain environment."