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Tuesday, June 02, 2015

Dollar stands tall, Asian shares slip

Tue, Jun 02 03:00 AM EDT image By Lisa Twaronite TOKYO (Reuters) - The dollar ascended to a new 12-1/2-year peak against the yen on Tuesday, while Asian shares fell for a second day as the stronger greenback pressured commodity prices. But financial spreadbetters predicted a brighter day in Europe, with Britain's FTSE 100 and Germany's DAX both seen opening up as much as 0.2 percent, and France's CAC 40 as much as 0.3 percent. "Ahead of European trade we are calling the major bourses firmer, with Greece headlines likely to remain the dominant theme," IG market strategist Stan Shamu wrote in a note. The dollar rose as high as 125.07 yen, its loftiest since late 2002, before retracing to stand at 124.66 yen, down about 0.1 percent on the day, after a spate of mostly upbeat U.S. data reinforced expectations that the Federal Reserve would raise interest rates this year. "The rise in the dollar against the yen has been steep but sentiment favors testing new highs rather than consolidating," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo. MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.8 percent, falling for the second day and touching its lowest intraday level since April 3, while Japan's Nikkei stock index erased earlier gains and slipped 0.1 percent, snapping its 12-day winning streak that was the longest since February 1988. Australian shares skidded about 1.7 percent, pressured by weaker commodities. The Reserve Bank of Australia kept rates on hold at a record low of 2.0 percent at its latest policy meeting on Tuesday as expected, but the Australian dollar surged more than 1 percent on the day after the RBA did not include an explicit bias to ease again. On Wall Street on Monday, U.S. stocks began the month with modest gains after the data. Consumer spending remained flat in April, but construction spending and manufacturing gained momentum, backing the view that the U.S. central bank is on track to begin to hike rates later this year. The economic reports helped U.S. Treasury yields rise to one-week highs, giving the greenback a lift. In Asian trading on Tuesday, the yield on benchmark 10-year notes stood at 2.186 percent, not far from the U.S. close of 2.192 percent on Monday. Boston Fed President Eric Rosengren, who is not a voting member of the Federal Open Market Committee, said on Monday he would like to begin raising rates as soon as possible, but also noted risks from the slowdown in China and Europe and the fact that U.S. growth is still not strong enough. Market participants awaited Friday's U.S. nonfarm payrolls report for a further gauge of the strength of employment conditions. The report is expected to show 225,000 jobs created in May, according to a Reuters poll of economists. Uncertainty about the outcome of Greece's financial negotiations continued to weigh on the euro, though hope for a resolution underpinned the common currency. It was last up about 0.2 percent at $1.0945. The leaders of Germany, France, the International Monetary Fund, the European Central Bank and the European Commission agreed at a meeting late on Monday to stay in close contact in the coming days to work on Greek debt negotiations, as Athens and its lenders struggled to reach deal that would prevent the country from defaulting on its debt. Greece is due to make a 300-million-euro ($327.93 million) repayment to the IMF on Friday. The euro was also pressured by business surveys that showed European manufacturing activity remained even more sluggish than its plodding global counterparts. An index tracking the dollar against a basket of six rival currencies edged down 0.1 percent on the day, to 97.271. The bleak global factory outlook combined with the firmer dollar to hit prices of dollar-denominated commodities, though they steadied in late Asian trade. Copper erased losses and added about 0.2 percent to $6,034 a metric ton, moving away from a six-week low of $5,985 hit on Monday. U.S. crude oil futures were last up about 0.2 percent in Asian trading at $60.33 a barrel, after plunging more than 1 percent at one point on Monday. Brent crude futures also added about 0.2 percent to $65.00. (Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Kim Coghill) ======================= Oil prices crisis: Saudi Arabia's reserves lost $49 bn in four months, says report By AFP Published: June 1, 2015 RIYADH: Saudi Arabia’s foreign currency reserves dropped by $49 billion in the first four months of 2015 following the dive in world oil prices, a report said Monday. The reserves, piled up in the past decade due to high crude prices, dropped from $732 billion at the end of 2014 to $683 billion at the end of April, Saudi firm Jadwa Research said in a report. In March and April alone, the reserves dipped $31 billion, it said. Oil prices crashed from around $115 a barrel in June last year to just $46 a barrel in January before recovering to around $65 a barrel. Read: New Saudi leaders to press efforts to diversify economy Oil income makes up over 90 per cent of Saudi public revenues. The world’s largest exporter is currently pumping 10.3 million barrels per day. Jadwa also forecast that the kingdom will post a budget deficit of $107.7 billion in 2015, compared with government projections of $39 billion. This is mainly due to a 39 per cent decline in oil revenues to $171.8 billion, from $285 billion last year, while spending remains high. In its regional economic outlook last month, the International Monetary Fund estimated the oil price necessary to balance the Saudi budget at over $100 a barrel. Read: Saudi Arabia only provides economic assistance: FO A large chunk of the forecast deficit — around $30 billion — is a result of new King Salman having granted Saudi workers two months extra pay. The report did not take into account the eventual cost of the Saudi-led air war against rebels in neighbouring Yemen. ===================== 3:05 am ET Jun 5, 2015 COMMODITIES OPEC’s Meeting in Vienna — Live The Organization of the Petroleum Exporting Countries has held its semiannual meeting on Friday in Vienna. The key metric the market is looking for, OPEC’s production target, will remain as 30 million barrels a day, even there were some expectations that it could move higher. The meeting could mark the swansong of 79-year-old Ali al-Naimi, Saudi Arabia’s oil minister and the most influential voice in the world oil market. He’s previously indicated that he wants to retire. He was instrumental in OPEC refusing to step down production to boost oil prices last year. Ahead of the meeting, fund managers had been cutting their bets on oil, with hedge funds and others cutting their trading positions on Brent and WTI, a sign that they are losing patience. Since OPEC decided to keep production unchanged, oil’s been on the rise. Stick with us throughout the day as we live-blog the meeting with our team on the ground in Vienna and our markets team in London. And in case you’re new to this, here’s a cheat sheet on how the meetings work. Sort by:OldestNewest 10:14 pmPrices hold gains even on a rising greenbackby Nicole FriedmanAdd a Comment Oil prices hold their gains following the OPEC meeting despite a sharp rise in the U.S. dollar, which typically weighs on oil prices. Perhaps oil traders see the stronger-than-expected US jobs numbers as positive for gasoline demand, or maybe they’re just enjoying the clarity that another six months of status quo OPEC policy has given the market. WTI up 0.5% at $58.26/barrel, Brent up 0.5% at $62.37/barrel. 10:12 pmNo discussion on individual quotasby Nicole Friedman In its decision to keep its output ceiling unchanged, OPEC didn’t discuss returning to individual country quotas, Qatar’s oil minister says. That could suggest that the cartel is not preparing for a production cut at a future meeting. “One of the ways it would be easier for OPEC to pursue cuts at a later date would be individual country targets,” said Helima Croft, global head of commodity strategy at RBC Capital Markets, in an interview before the meeting. 10:09 pmOPEC's ceiling is a fictionby Michael Amon OPEC kept its ceiling at 30 million barrels a day Friday, but the ceiling is largely a fiction. The producer group is collectively pumping at about 31 million barrels a day, and Saudi Arabia and Iraq have ramped up their production greatly in recent months. Delegates leaving OPEC’s meeting said individual production quotas weren’t discussed. And OPEC Secretary General Abdallah Salem el-Badri said the production ceiling was an indicator, not a quota. 10:09 pmOil ministers are pleasedby Sarah Kent OPEC’s widely-expected move to keep its oil production ceiling unchanged has left everyone very happy, according to ministers filing out of the gathering. The officials gave away few details about how the meeting went, but many echoed how pleased they are with the outcome. It could be something to do with the bump it’s given oil prices. 10:08 pm'This isn't an attack on U.S. shale specifically'by Georgi Kantchev OPEC’s decision to keep its production target at 30 million barrels a day is not a surprise but a signal that the organization’s strategy is unchanged from November, says Dominic Haywood, oil analyst at Energy Aspects. “They want to maintain market share but this isn’t an attack on U.S. shale specifically,” Mr. Haywood says. “It is rather a broad decision by OPEC to no longer guarantee the returns of non-OPEC high cost production globally.” Still, he says, the U.S. shale industry is likely to suffer in the second half of this year as lower prices bite into companies’ profitability. 10:07 pmby Georgi Kantchev 9:52 pmBP and Shell are gaining on OPEC's decision to stand patby Chip Cummins BP (BP) and Shell (RDS) are both early gainers on OPEC’s decision to hold production flat. Investors in oil and oil companies started to get nervous early Friday on some talk outside the halls of OPEC the group would actually raise its ceiling—an aggressive signal that it was redoubling efforts at fighting for market share, no matter the price. OPEC can’t pump much more than it already is, but the fact it didn’t go that route put a floor under prices in early afternoon trading in London. Longer term, the decision could help sentiment. Big Oil has complained that OPEC’s recent abdication as swing producer has contributed to volatility, making it hard for companies to forecast prices and plan long-term projects. OPEC isn’t picking that role back up now, but at least it’s being consistent. 9:48 pmWhat will non-farm payrolls do? by Phillipa Leighton-Jones In case anyone had forgotten, it’s Jobs Friday in the U.S., with non-farm payrolls expected to come in at 225,000 jobs added in May, a slight increase from April’s 223,000 gain, and the unemployment rate to hold steady at 5.4%. The strength — or weakness — of that figure will have a direct impact on the dollar. A weak figure will bring out the dollar bears, and a good one the bulls, because it will indicate that the Fed’s Janet Yellen will be moving one step closer to increasing interest rates, a dollar positive. How does that impact oil? Well, oil’s priced in U.S. dollars, and follows the gyrations of the greenback. If the dollar goes up, the price of oil comes down. Here’s MoneyBeat’s Jobs Friday live blog. 9:45 pmShale has been much nimbler than OPEC probably hoped forby Chip Cummins The battle for global oil market share continues. After holding its output ceiling unchanged Friday, OPEC is giving its strategy of pump-‘til-you-drop another six months. When it first decided back in November to take a pass on the role of global swing producer, many expected the price drop to knock the legs out of those pesky U.S. shale drillers, who needed prices a lot higher than Saudi’s $7-a-barrel to profitably produce. But shale turned out to be nimbler than many expected—slashing drilling but moving those rigs that it kept working to its best deposits. Costs have shriveled, but output may not have all that much. Data is difficult, but the latest numbers shows overall U.S. production hasn’t fallen at all. Will that nimble response last another six months? (Photo: Getty Images) 9:42 pmWhat happens nowby Sarah Kent As smiling ministers trickle out from what Saudi oil minister Ali Al Naimi described as an “amicable” OPEC meeting, the official press conference is getting underway. In the basement of the Secretariat Secretary General Abdullah el badri will brief the press on what is already common knowledge: the group has decided to keep its official output ceiling unchanged. 9:34 pmProduction will in fact remain higher than that ceilingby Georgi Kantchev “No surprise, exactly what was expected,” says Marina Petroleka, head of oil & gas at BMI Research, after the OPEC decision to leave its output target unchanged. According to Ms. Petroleka, the cartel’s 30 million notional production target remains, but production will remain well above it – especially in the summer months as Middle East produces more to meet higher domestic demand. “Eyes are now to the next meeting in end November, depending on what happens with the Iranian nuclear negotiations. The next meeting could be where a lot more internal negotiation and change of policy may need to take place,” she said. 9:21 pmWhat happens to shale production now? by Bill Spindle OPEC’s decision to keep its same production ceiling–essentially a signal for members to pump as much as they like–sets up another several months of bruising market share battles in the global oil market, since U.S. production has yet to fall off significantly, as some had expected it would by now. Brent crude is at $62.46 per barrel, up 0.7% while Nymex is at $58.32, up 0.6%. (Photo: Chester Dawson/The Wall Street Journal) 9:16 pmHere's how oil's reacting by Georgi Kantchev Crude oil prices reversed course on Friday and moved higher after the Saudi Arabian oil minister said the world’s oil cartel will keep its production ceiling unchanged. Crude oil prices had been about 1% lower on the day in the morning session in Europe, but jumped abruptly as the OPEC news broke. Brent crude was up 0.7% on the day at $62.48 a barrel while WTI, the U.S. marker, was up 0.6% at $58.36 a barrel. 9:15 pmHolding steady, again, shows how OPEC's role has changed by Summer Said OPEC delegates said Friday the cartel would keep its collective output level unchanged at 30 million barrels a day, the second time in six months the cartel decided to take no action amid a global glut of crude and weak oil prices. In the past, the Organization of the Petroleum Exporting Countries—which pumps about one in three barrels of oil consumed each day–has throttled back on output to support prices. But in a break from that strategy, OPEC held production steady at its meeting in November. 9:13 pmby Sarah Kent 9:07 pmOil's on the riseby Georgi Kantchev 9:06 pmby Sarah Kent 9:04 pmHere's the big newsby Georgi Kantchev 8:37 pmby Sarah Kent 8:32 pmEnergy Journalby Phillipa Leighton-Jones Here’s today’s Energy Journal, outlining events so far at the OPEC meeting. Sign up here. 8:26 pmby Michael Amon 8:23 pm'Big Oil has tremendous interest in Iran'by Georgi Kantchev Apart from the OPEC meeting itself, a notable development this week has been the interest expressed by international oil companies towards Iran, says Marina Petroleka, head of oil & gas at BMI Research. This goes to show there is tremendous interest from all of the big companies to get back in, Mrs. Petroleka said. But first, Iran’s return to the global oil market – if the international sanctions are lifted this year – will have a downward impact on prices. “I would be interested to know if they discuss Iran post-sanctions during [the OPEC] meeting. I bet they will,” she said. 8:10 pmWhy Kuwait will struggle to meet its oil production targetby Summer Said Kuwait is still on target to up its production capacity from 3.2 million barrels a day to 4 million barrels by 2020, the country’s oil minister says, but officials have privately acknowledged the country won’t meet this goal. The Gulf state has faced delays on new projects over the years, many of which have been blamed on political disagreements over contracts awarded to foreign companies. Analysts say the country may be able to up its capacity to 3.5 million barrels a day at best by 2020. (Photo of Kuwaiti Oil Minister Ali Saleh al-Omair: AFP/Getty Images) 8:06 pmby Sarah Kent 8:05 pmby Lisa Fleisher 8:04 pmby Michael Amon 7:38 pmIs OPEC setting up expectations for a hike in production? by Georgi Kantchev Saudi Arabia’s oil minister has taken every opportunity to highlight that the fundamentals of the market remain excellent with a strong demand outlook. By doing so, Ali al-Naimi might have been setting the scene for a surprise announcement later today – that OPEC will increase its production quota, says Mark Henderson, analyst at Westhouse Securities. The oil market has been nervous over the past few days and Brent has fallen by around $5 a barrel as some fret about a possible negative surprise today. Still, the “important guys” within OPEC (Saudi Arabia, Kuwait, UAE) will seek to adopt a patient approach, Mr. Henderson says. 7:25 pmby Sarah Kent 7:24 pmby Sarah Kent 7:17 pmYou wanna go to Las Vegas?by Summer Said Saudi Arabia’s oil minister tells reporters that while they see many risks in their lives, he does not. The minister invited reporters to go with him to Las Vegas, when asked if he believes oil prices to continue to improve in the second half of the year. 7:15 pmCommerzbank says to expect 'no surprises' from OPEC todayby Georgi Kantchev No surprises from OPEC’s meeting today, says Commerzbank. It expects OPEC to confirm its production target of 30 million barrels per day once again. The reason: oil prices have recovered significantly and U.S. shale oil production has stopped increasing so rapidly. In fact, the sharp decrease in drilling activity should mean that it actually falls in the next few months, Commerzbank says. Still, the considerable global oversupply will preclude any noticeable increase in price above $65 per barrel. 7:11 pmOPEC was slow to realize the impact of shale -- by Sarah Kent OPEC was slow to recognize the impact shale oil would have on the crude market, Iraq’s oil minister Adel Abdul-Mehdi admitted Friday. “Maybe we were about two years late in really evaluating shale oil, that’s why it came almost as a shock. It should not have been a shock,” he said. The producer group is paying for that mistake now, suffering the effects of weak prices and a challenge to its market share. It won’t happen again, the minister said. “Now we are more mature and realistic in understanding the market realities.” 7:08 pmPrices put pressure on productionby Summer Said Production from marginal fields will drop if prices remain at the current levels, Saudi Arabia’s oil minister Ali al-Naimi says. Prices are improving, but slowly, he adds. 7:07 pmMore OPEC members, more powerby Sarah Kent To some, OPEC is a fading institution, but it has a plan to regain its crown as the dominant force in the oil market: adding new members. “More members in OPEC means more share, empowering OPEC, that’s what we need,” Iraqi oil minister Adel Abdul-Mehdi said during a press briefing. “We wish that all oil producing countries work together in cooperation, not only in OPEC but as a whole, as producers,” he said. He quickly added: “without creating any cartel.” 7:03 pmThe future looks good, says UAEby Nicole Lundeen Suahail Mohamed Al Mazrouei, the United Arab Emirates’s oil minister, tells journalists Friday morning he is optimistic about the future before the Organization of Petroleum Exporting Countries. He does think the market will take time to balance, but don’t ask him at what price or how long it will take, he says. Overall, the decision last November by the organization to keep its production ceiling was a wise one, he says. 6:55 pmby Georgi Kantchev 6:54 pmGiving nothing awayby Sarah Kent As oil ministers filed into OPEC’s glass and concrete fronted building in sunny Vienna, they give little away, smiling and nodding, but ignoring questions about their upcoming gathering. In the pre-meeting press briefing, reporters piled around ministers seated in a horse shoe formation, shouting questions in Arabic and English and waving recorders and microphones in the official’s faces in their last effort to glean any insights ahead of the gathering. 6:48 pmSaudi Arabia sees no threat from lower oil pricesby Summer Said OPEC’s kingpin, Saudi Arabia, sees no threats from lower oil prices, and those who believe in this are short-sighted, the country’s oil minister says. The kingdom is a dynamic economy with several resources, the minister says. 6:43 pmSaudi 1 - OPEC 0by Georgi Kantchev Is OPEC’s market share strategy actually working? When the oil cartel decided last November not to cut its output, many saw this as the first salvo in a battle for market share with the U.S. shale industry and other global suppliers. But Tamas Varga, analyst at PVM, says that OPEC’s fight for the global supply market has, so far, been a failure whilst Saudi Arabia’s intent of increasing its own footprint is working. OPEC’s share has actually shrunk from 36.5% in the pre-shale year of 2008 to 32.29% in the first quarter of this year. Meanwhile, Saudi Arabia has seen its share of global output pass the 10% mark since last November, Mr. Varga estimates. 6:35 pmSaudi oil min says market situation is improvingby Summer Said The situation in the crude oil markets is improving and the supply is diminishing, Saudi Arabia’s oil minister Ali al-Naimi says. “You probably see a lot of risks in your life. I don’t,…“I’m not in the business of projecting risks” he says. Oil prices are improving slowly, says the minister, adding he does not have a machine to foresee what happens in the future. (Photo: AFP) 6:29 pmFlashesby Phillipa Leighton-Jones Iran Oil Minister Says Not Satisfied With Current Oil Price Iran Oil Minister Says Most of OPEC Agrees $75/Bbl is a Fair Price Iran Oil Minister: Asks OPEC to Consider its Return to Oil Markets Iran Oil Minister: Asks OPEC to Consider its Return to Oil Markets 6:23 pmby Georgi Kantchev 6:12 pmCrude hasn't priced in an OPEC surpriseby Georgi Kantchev With the OPEC meeting underway, how will oil prices react to the news from Vienna? Olivier Jakob of Petromatrix says that for now, not much has been priced in for OPEC as the broad consensus is that the organization will not produce anything new and maintain its production quota. “Crude oil prices can therefore be reactive to anything outside of the consensus view on OPEC,” Mr. Jakob says. Some observers say a production hike rather than a cut is possible today but that view is not shared by many delegates in Vienna. Brent is down 0.8% to $61.56 while WTI is trading down 1% at $57.45 6:11 pmby Michael Amon 6:06 pmFlashesby Phillipa Leighton-Jones *Iraq Oil Minister: Everything Will Be Discussed, Including Raising Output Ceiling *Iraq Oil Minister: Favor Increasing No. of Members of OPEC to Increase OPEC’s Market Power *Iraq Oil Minister: Customers Happy With New Oil Streams *Iraq Oil Minister: Have More Customers Than We Need *Iraq Oil Minister: Heading to $75 a Barrel by End of Year *Iraq Oil Minister: Iraq Can Produce 6 Million Barrels a Day by 2020 *Iraq Oil Minister: KRG Not Yet Supplying 550,000 Barrels a Day *Iraq Oil Minister: We Cannot Stop Technological Progress in Oil Sector *Iraq Oil Minister: Shale-Oil Boom Shouldn’t Have Been a Shock *Iraq Oil Minister: Was Late to Recognize Shale-Oil Potential *Iraq Oil Minister: Discussing Contracts With IOCs (Photo of Iraq’s oil minister, Adil Abd Al-Mahdi, AP) 6:04 pmby Michael Amon 6:03 pmIran pushes to be heard by OPECby Phillipa Leighton-Jones The prospect of Iran returning in full force to the world oil market has been an undercurrent in both public and private meetings this week in Vienna. But an Iran freed from sanctions could add to a global oversupply of crude that has weighed on the market, as this story explains. (Photo of Iranian oil minister Bijan Namdar Zanganeh, AFP/Getty) 6:02 pmby Georgi Kantchev 6:01 pmTough OPEC talking on production amid prospect of Iran ramping upby Bill Spindle There’s a chance that the talk by some Arab gulf states about raising OPEC’s production ceiling is in effect a rhetorical shot across rival Iran’s bow: Iran has made clear it will ramp up exports if sanctions on it are lifted as part of a nuclear deal, and it would like others in OPEC to produce less so prices don’t fall. 5:58 pmFlashes from our wireby Michael Amon Kuwait Oil Minister Willing to Listen to OPEC Countries That Want Production Increase Kuwait Oil Minister: Decision Will Be Taken for Benefit of All, Not Individual Countries Kuwait Oil Minister: Kuwait Not Against Iraq, Iran Kuwait Oil Minister: Production Decision Last November Was Good Kuwait Oil Minister: Oil Prices Have Been Improving Kuwait Oil Minister: We Have to Keep the Production Ceiling Kuwait Oil Minister: Kuwait Investing to Increase Its Future Production UAE Oil Minister Optimistic About Future UAE Oil Minister: Decision Last November on Production Was Wise UAE Oil Minister: We Are Here to Balance the Market UAE Oil Minister: We Will Discuss How to Make Sure Enough Supply to Meet Demand 5:54 pmFlashes from our wireby Bill Spindle – UAE oil minister says there is need to wait and be patient – UAE oil minister not “heard anything” about a discussion to raise output 5:53 pmby Michael Amon 5:52 pmHere's how OPEC meetings used to beby Phillipa Leighton-Jones With regards to that shouting match, OPEC meetings in the past have been relatively chaotic affairs. Moving them to Vienna has at least dealt with some unconventional logistics. Here’s a Q&A with John Hall, now chairman of Alfa Energy, who has watched the oil market for more than four decades and has visited Organization of the Petroleum Exporting Countries meetings for the past 10 years. 5:48 pmThis could become a shouting match. Other OPEC meetings haveby Michael Amon OPEC observers had predicted a short meeting for the cartel Friday morning. Now that they’re actually behind closed doors, it seems like they might have much to discuss. Indonesia’s return as a member. What to do with production. And there may be pressure from Iran and Libya to talk about making room for their coming supplies. OPEC meetings have last hours and sometimes devolved into shouting matches. 5:38 pmby Michael Amon 5:34 pmFive things to watchby Phillipa Leighton-Jones What should we be looking for during this OPEC meeting? Here are five things to watch, including production quotas, Russia, Iran and any awkward encounters between OPEC and Big Oil, whose executives have been in Vienna this week for the OPEC seminar. It’s the first time in several years that’s coincided with the OPEC meeting. 5:23 pmby Sarah Kent 5:22 pm 5:18 pmHow best to accommodate Iranian volumesby Georgi Kantchev Deutsche Bank expects a busy day for OPEC today: Besides the production target question, the bank expects the agenda to include how best to accommodate additional Iranian volumes should sanctions be lifted and Indonesia’s request for OPEC readmission after a six-year absence. Deutsche sees no chance for surprises with the output target which will be maintained at the current 30 million barrels a day. With the group’s output steadily ramping to reach 31.5 m/bd the suggestion is that OPEC, led by the Gulf States, is increasingly comfortably defending market share and will remain committed to the policy decision taken last November, Deutsche Bank says. 5:15 pmIf OPEC stays patby Bill Spindle With plenty of talk in previous days of a possible surprise move by OPEC to raise its production ceiling, a decision that was once uniformly expected –that the group will keep its quota steady — could even put upward pressure on prices if it’s interpreted as a sign OPEC is towing a middle ground and might tighten production down the road. 5:14 pmRemember Thanksgiving?by Chip Cummins Remember Thanksgiving Day 2014? That was the last time OPEC met to discuss prices and output levels. Most Americans had the day off, and when ministers huddled to make their decision about whether to lower output, many U.S. traders were at home, getting ready for turkey. Things were sleepy in Europe, too. Analysts and traders were mostly predicting OPEC wouldn’t change its output level. When the cartel did just that, however, markets went into a tailspin–one that eventually sent crude down by more than half from its summer peak. Sure, trading volumes were thin, and bearish sentiment about oil had built up for months. But with a big recovery in oil prices since the start of the year, don’t discount another OPEC “no-change” plunge. 5:12 pmRig counts and jobs countby Georgi Kantchev While all eyes are on OPEC’s meeting, there’s more in store for oil today: rig counts and U.S. jobs data. Baker Hughes Inc. will publish the weekly oil drilling rig count—a proxy for activity in the industry—at 1pm EDT/5pm GMT. The number is down 60% since October but the rate of decline has slowed in recent weeks as prices have rebounded from their lows. Markets will also be tracking the U.S. jobs report, out at 8.30 EDT/12.30 GMT, which could jolt the dollar. Oil, which is priced in dollars, often follows the gyrations of the greenback as they become more attractive for holders of other currencies when the dollar loses value – and vice versa. 5:07 pmOPEC raising production is a real possibilityby Michael Amon Most observers believe OPEC will stick to its production targets of 30 million barrels a day, and almost no one believes the cartel will cut. But a growing number see a production increase as a potential outcome. The Kuwait oil minister said this week it was an option. Upping OPEC’s production target to 31 million barrels a day would acknowledge reality, since the cartel’s big producers like Iraq and Saudi Arabia have ramped up production in a fight for market share. But it would also probably send a bearish signal to the market and depress prices further. 5:05 pmIs OPEC producing 30 million? Or more? by Sarah Kent Consensus has it that OPEC won’t make any changes to its strategy when it meets in Vienna this morning, but watch out for surprises Olivetree Securities James Milligan warns. “OPEC made a mockery of the consensus view at the last meeting over Thanksgiving,” he said, noting that OPEC members have produced nearly 900,000 barrels a day more oil than their 30 million barrel a day production ceiling since their last meeting. 5:03 pmHow an OPEC meeting unfoldsby Phillipa Leighton-Jones How does an OPEC meeting unfold? Well, oil ministers from OPEC nations have been gathering in Vienna this week where they hold bilateral meetings to discuss the state of play. Saudi Arabian oil minister Ali al Naimi is the most powerful person at OPEC’s table. His early morning walks around the center of Vienna are a regular feature, and he’s usually followed by a coterie of journalists. Watch him carefully this year: This could potentially be his last OPEC meeting since he has indicated he wants to retire. Here’s our cheat sheet from oil reporter Sarah Kent on how an OPEC meeting unfolds. (Photo: Bloomberg) 4:51 pmA quick update on oil pricesby Georgi Kantchev Oil prices are down, trading at a one-week low on Friday as markets are anticipating that OPEC won’t cut its production levels at its meeting later today. Brent is down 0.6% at $61.66 while WTI is down 0.8% at $57.54. Both contracts are down for two consecutive sessions 4:50 pmIndonesia looks to return to OPECby Michael Amon OPEC’s power over the oil market is widely seen to be waning, but there’s one country that wants into the cartel: Indonesia. The Asian country has applied for membership, and its application will be discussed at Friday morning’s closely watched meeting. Indonesia left OPEC in 2009 shortly after it became a net importer of oil and not an exporter and its reasons for wanting to join OPEC are a bit mysterious. Energy minister Sudirman Said told The Wall Street Journal that he wanted his country to be a bridge between consumers and producers at OPEC. But OPEC is firmly a producer group, and it isn’t clear why its membership would benefit either OPEC or Indonesia. 4:44 pmOPEC has a dilemma in new suppliesby Michael Amon The Organization of the Petroleum Exporting Countries has a looming issue that it is unlikely to address at Friday morning’s meeting: Looming supplies from Iran and Libya. Iran has promised to flood the market with 1 million barrels of crude exports if western sanctions are lifted this year. Libya is also preparing to increase its output this summer after some heavily damaged fields come back online. Bit OPEC delegates say they’re likely to table a discussion about how to handle those new supplies until its next meeting. 4:43 pmA flood of oilby Sarah Kent The elephant in the room at today’s OPEC’s meeting is likely to be the potential for a flood of new oil onto the market if sanctions on Iran are lifted this year, but the producer group should look out for a wave of exports from a different source entirely, according to ConocoPhillips CEO Ryan Lance. The U.S. oil major chief is predicting U.S. oil exports could hit the market within the next few years. The boom in domestic production has already roiled markets globally, helping send crude to a six-year low in January. “My advice to Opec is to look at that because I think that it’s an issue that is a very real possibility in the next few years,” Mr. Lance warned this week in Vienna. 4:42 pmWelcomeby Phillipa Leighton-Jones Good morning folks, and good afternoon in Asia. Thanks for joining us for this live blog of the OPEC meeting in Vienna. We’ll be reporting from that all day from here and over on WSJ.com, so stay tuned.

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