26th NOVEMBER 2014

PREVIEW: OPEC Meeting Thursday 27th November 2014

Consensus expectation is for OPEC to maintain their production target of 30mln BPD although some expect a cut
of between 500k-1mln BPD

Initial comments from OPEC delegates expected to start hitting the wires from 0900GMT/0300CST

Crude future volumes likely to be light given pit closes for the US Thanksgiving holiday

SCHEDULE
0900GMT/0300CST Opening session All OPEC heads and delegate in attendance
1100GMT/0500CST Closed session
1500GMT/1000CST Press conference from Secretary General El-Badri
**NOTE: Often decisions made by OPEC are leaked to the press and seen before the official press conference from the Secretary
General. Historically this has occurred between 0900-1100GMT

SUMMARY
OPECs keenly anticipated 166th meeting on Thursday 27th November falls on the US Thanksgiving holiday, but despite market
closures in the States many market participants will be ready to react to any surprises. Consensus is that OPEC will leave their
production target unchanged at 30MBPD, however there are outside bets that there will be an announcement of a cut to
output given the recent fall in crude prices as prices have fallen more than 30% since June. Many have speculated that
OPEC would need to cut production by at least 1mln BPD to satisfy markets and anything less could see further selling pressure in
WTI and related products.
A rift between OPEC members was initially highlighted in early October after Venezuela called for an emergency meeting
in response to falling prices, and since then other proponents have supported the argument for a reduction in production.
Currently the largest and most powerful producers in the cartel want no change in production levels, but Venezuela, Iraq Ecuador
have already stated they will request that OPEC trims production. The Iranian news agency Mehr has reported that the OPEC
meeting may result in 1mln BPD cut, but despite this official sources have said that OPEC will exclude Iraq, Libya and Iran if a
decision is made to cut output because they are already pumping below potential.
Most recent reports show that OPEC members are inching toward a compromise that could lead them to cut oil supply
and a Gulf official said "Saudi Arabia will likely go for a rollover of the current ceiling. However there have been many conflicting
reports, and on Tuesday a four-country meeting between Russia, Saudi Arabia, Venezuela and Mexico was held and yielded little
results, with no significant deals made and no agreement to make a reduction in output. Following decisions between these
countries crude futures saw selling pressure as speculative positions on a possible cut were unwound, although some
have noted further downside is possible with no change in production. This has been indicated by a news wire poll which
suggests prices could fall as low as USD 60/bbl, but if OPEC cut output by the upwards of 1.5mln bpd then prices in WTI
and Brent crude futures could rise, possibly to USD 90/bbl.

POSSIBLE OUTCOMES
Leave production quota unchanged at 30mln BPD

Consensus expectation

Reduce output by 500k BPD (as indicated by Libya)

Some expectation

Reduce output by >1mln BPD (as indicated by Iran)

Not fully priced in and least expected

Cut overproduction above 30mln BPD production was 30.9mln BPD in September

2nd most likely outcome

ANALYST NOTES

Goldman Sachs say the oil slide seen in the past few days reflects OPEC cut seen as unlikely. There is an increased
likelihood of a cut but not a large one

Citi say OPEC cut at November meeting is a `remote possibility` and JP Morgan expect no agreement

Bank of America says OPEC may cut output by 500K bpd next week

SocGen say 60% chance OPEC to cut shared output by 1-1.5mln bpd

Morgan Stanley say OPEC are increasingly likely to act at the November meeting, OPEC set to cut in 2015 even without
November deal

BNP Paribas repeats view OPEC to cut oil production, to shake off negative sentiment in the auto market, OPEC will
need to reduce production by between 1 and 1.5mln bpd

RECENT COMMENTARY FROM OPEC MEMBERS **ordered by production capacity**

OPEC
NATION

CAPACITY
(BPD)

RECENT COMMENTS

Saudi Arabia

12.5mln

Saudi oil Minister Al-Naimi says Saudi, the US and others should not cut output. (26th Nov)

Iraq

3.7mln

Countrys ambassador to the US Faily says OPEC has 'substantial challenge' to stabilise oil prices.
(6th Nov)

Iran

3.5mln

Iranian Oil Minister Bijan Namdar Zanganeh may propose a cut of 1mln barrels a day in OPEC
output when he meets Saudi Arabias Ali Al-Naimi, according to Irans state-run Mehr News agency.
(23rd Nov)

Kuwait

3.3mln

Kuwait Oil Minister says he does not think OPEC will cut production at its next meeting and says
price may fall below current level but will stabilize. (10th Nov)

UAE

3.0mln

UAE oil minister says UAE will do all it can to meet global oil demand 18th November. OPEC
decision on oil output will be unanimous, according to the UAE oil minister. (10th Nov)

Venezuela

3.0mln

Country has capacity to act on oil price fall, according to Venezuelan foreign minister Ramirez. Says
fair price for oil is USD 100/bbl, prepared to cut oil production if needed. Declines to comment on
potential OPEC output cuts. (20th Nov) No agreement on output reduction at four-way meeting
according to Venezuelan Foreign Minister Ramirez. (25th Nov)

Nigeria

2.4mln

Nigerian oil minister says OPEC doesn't necessarily need to cut at next meeting. (21st Nov)

Angola

1.87mln

Angola deputy oil minister says oil prices are too low for all producers and OPEC are undecided on
production cut. Says Angola are basing their budget on sub-USD 90.00/bbl. (11th Nov)

Libya

1.55mln

Libya OPEC governor says expects OPEC to agree to comply with output targets, if needed cut
target by at least 500K bpd. (19th Nov)

Algeria

1.2mln

Algeria and Venezuela to defend oil prices, according to an Algeria press report. (13th Nov)

Qatar

780k

Former Qatari Oil Minister Al Attiyah said that OPEC cant balance the market alone and that
Russia, Norway and Mexico must all come to the table. (19th Nov)

Ecuador

555k

Ecuador and Venezuela will ask OPEC to trim production in excess of 30mln bpd, according to an
Ecuador official. Says Ecuador and Venezuela working to convince others to accept plan ahead of
the meeting. (18th Nov)