VIENNA: OPEC said on Monday it has called an informal meeting of member countries for next month in Algeria to help stabilise the oil market.
The Vienna-based Organisation of the Petroleum Exporting Countries said in a statement that the meeting would take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28.
“OPEC continues to monitor developments closely, and is in constant deliberations with all member states on ways and means to help restore stability and order to the oil market,” it said.
OPEC President Mohammed Bin Saleh Al-Sada reiterated the organisation’s view that oil demand will pick up in the third and fourth quarters of this year.
OPEC sees recent oil price declines and current market volatility as “only temporary” and due to weak refinery margins, an inventory overhang and the impact of Britain’s decision to leave the EU on the crude oil futures market.
An expected return of economic growth in oil-consuming countries would rekindle demand for oil in the remainder of the year while oil supply would tighten, leading to higher prices.
Al-Sada added that more investment in oil production was needed to meet growing demand and offset declining output from existing wells.
Oil production was expected to decline as a result of an “unprecedented drop in capital expenditure” in the industry since last year.
Oil edged higher to near $42 a barrel in Asia Monday but analysts said the increase was unlikely to last as the commodity remains under pressure by a supply glut and a strong dollar.
Prices have been fluctuating since entering a bear market last week, falling more than 20 percent and closing below $40 a barrel for the first time since April.
OPEC said last month it expected the global supply glut to ease further this year and next thanks to reductions in oil output from producers outside the cartel, particularly the United States.
If accurate, this would be a vindication of its Saudi-led strategy since 2014 of squeezing non-OPEC suppliers by keeping production at high levels despite low prices.
In its July monthly report, OPEC predicted a drop in non-OPEC output to 56.0 million barrels per day (bpd) this year from 57.0 million bpd in 2015.
In 2017, a further drop to 55.9 million bpd is expected, OPEC said, due in part to further falls in production by US shale oil producers, who need a higher oil price than the current $45-50 to survive.