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Jefferies Bache Energy Futures Group senior vice president Andy Lebow on what to expect from the upcoming OPEC meeting.
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700 thank him.
So OPEC facing one of its toughest hurdles yet the oil cartel meets in Vienna tomorrow to discuss oil production levels of the political infighting is at a fever -- -- Crude prices down 16% year to date will that oil ministers come to a consensus.
Andy -- is senior VP of energy futures at Jefferies beach thanks so much for -- -- -- we appreciate it.
With -- great to be here.
So you know we're just talk about the freefall in oil and having been to so many OPEC meetings myself I know this is something that makes that really nervous when you see the price freefall as it -- Do you think there's any action that they can take today that will put a floor you know overnight tonight at the meeting that would put a floor under oil prices.
No I don't the one thing that you need to know about this OPEC meeting is that the full ministerial meeting is scheduled for only one hour.
And while they have a lot to talk about they don't want to talk about it with each other.
So I think that this meeting is going to be quick.
I don't see any action I think they're gonna roll over the -- thirty million barrels a day and get out of -- quickly.
Quiet -- every -- and you know they've been there for couple days and all the picked politicking takes place ahead of time they go to each -- hotels and and you don't have these discussions and have these negotiations when they show the actual building you know.
Nine times out of ten the decision it is are -- made you really believe that they're gonna leave the quota exactly where it is to say no even Saudi Arabia was coming in trying to say they're.
Pushing for even more production.
Right the key here to support prices is going to be to reduce production.
And Saudi came in here saying that they wanted to production quota increase which doesn't.
Lead me to believe that they want to reduce production.
-- political implications for us here in the US and the you know just kind of curious about if it changes the dialogue about whether or not to you know -- booster beef -- domestic drilling.
Well this has been one of the great success stories has been the Verizon.
US production.
-- and has been up to 700000.
Barrels a day a new record that's the North Dakota.
Production and US production is 600000.
Barrels a day.
Above last year so we're continuing.
To increase production and that is a great thing.
So will it have any impact on the WTI price then -- -- -- the US care about what's going on in OPEC.
Less now because of what you just said that we did perhaps a couple of years ago.
Well I think what it does is it reduces the risk premium to have domestic production.
Increase.
We should always care about what OPEC does because they are still major producers.
And guide the consumer has to watch OPEC.
How relevant are they I mean compared CEO five years ago it seems like every time the -- spoiled very high are we going OPEC when it's -- like as we say they're not relevant.
What's the -- I think there's still relevant because I think the increase production by Saudi.
The other Persian gulf producer is and Libby of course coming back to it's near.
Pre crisis level I think that's been a major factor in getting prices down.
And as we've all seen the pump prices have come off dramatically year over the last few.
Bob months suddenly think eighty dollars as a floor for an oil.
I I think it.
This could go below they are again inventories have built a lot over the first half of the year.
And we still look like there's going to be a surplus in the second half of the year.
So eighty may not be a floor you know we may break 88 get down this 75.
We're aware I think that that could be -- more likely floor are right -- about thanks so much for joining us.
