OPEC to head to June talks without plan for supply cap

There are currently no proposals on the table for the Organization of Petroleum Exporting Countries (OPEC) to revive limits on crude output at its June meeting after the failure of talks to freeze production last month.

A meeting of representatives from the OPEC in Vienna discussed how the fundamentals of oil supply and demand are improving. The proposal to freeze output has been overtaken by changes in the market and may no longer be necessary.

Oil has rebounded after slumping to the lowest since 2003 earlier this year on signs the global glut is easing as US output declines. Prices gained even though OPEC itself has been without a production target since December, and talks with other producers to freeze output fell apart last month after Saudi Arabia refused to join without Iran. While the recovery has relieved some pressure on producers, signs of discord persisted within the oil-exporters group.

Brent crude, the international benchmark, has continued to advance since the failure of the Doha talks, rising to $48.50 a barrel, the highest level since November. Global supply and demand will move close to balance in the second half of the year as lower prices take their toll on production outside OPEC, the International Energy Agency said last month. US crude output fell to 8.83 million barrels a day, the eighth consecutive weekly decline, according to Energy Information Administration data.

There were indications the freeze proposal could be revived at OPEC’s bi-annual meeting in June. While Venezuela, one of the architects of the freeze plan, requested that non-members that participated in the Doha talks should be invited to the June meeting, OPEC nations have yet to respond to the request.

In a sign of continuing discord within OPEC, members of the group were unable to finish their long-term strategy report at the meeting in Vienna because of differences over the wording of the document. The plan was already delayed in November because of disagreements over clauses suggested by some members about curtailing output, setting production quotas and finding ways to maximize OPEC profit.