OPEC poised to keep pumping even as global oil glut persists

Oil group OPEC is set on Friday to stick by its policy of unconstrained oil output for another six months, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports.
With no apparent dissent, the Organization of the Petroleum Exporting Countries will roll over its current output ceiling, renewing support for the shock market treatment it doled out late last year when Saudi Arabia, the world's top supplier, said it would no longer cut output to keep prices high.
With oil prices having rebounded by more than a third after hitting a six-year low of $45 a barrel in January, officials meeting in Vienna see little reason to tinker with a strategy that seems to have resurrected moribund growth in world oil consumption and put a damper on the U.S. shale boom.
"I am 100 percent comfortable with the oil market situation," Saudi Arabia's oil minister Ali al-Naimi told the Saudi-owned al-Hayat newspaper. He told reporters on Friday that he was confident production from marginal fields outside of OPEC would fall even at current prices.
"The decision taken in November was the right one," said UAE Energy Minister Suhail bin Mohammed al-Mazroui. "It will take time for the markets to rebalance."
Nor is OPEC eager to tackle the tricky questions set to arise in the coming months as members such as Iran and Libya prepare to reopen the taps after years of diminished production.
Iranian Oil Minister Bijan Zanganeh will press the group for assurances that other members will give Tehran room to add as much as 1 million barrels per day (bpd) of supply once Western sanctions are eased, but seems unlikely to pick a fight now.
Just ahead of the meeting, Zanganeh told reporters that he was not pushing for a change in the output ceiling.
"When the production comes, this matter will settle itself," one OPEC delegate told Reuters. That may not occur until 2016, according to many analysts who question how quickly Tehran will win relief from sanctions and be allowed to sell more crude.
Libya, still afflicted by a crippling civil war, hopes to double production to some 1 million bpd by September if key ports resume working, but past efforts have failed to deliver a sustained recovery in shipments.
Brent crude futures slipped below $62 per barrel on Friday, nearing their lowest price in seven weeks, and U.S. oil is on track for its first weekly decline since March as traders anticipate a rollover decision and see weakening physical market conditions. But prices are still $15 off their lows, and some analysts see further gains ahead.
"The markets are moving in OPEC’s favour," said Dr. Gary Ross, executive chairman of PIRA Energy Group. "Prices are stimulating robust demand growth and slowing capex. This was the objective of the Saudi strategy and it’s working."
OPEC is set to convene its formal session by noon and a result is likely to be announced quickly thereafter.
DON'T RAISE THE ROOF
There also appeared little interest in adjusting the group's formal output ceiling of 30 million bpd to reflect the new reality. Output has exceeded that limit for most of the past year, reaching 31.2 million bpd in May, its highest in three years, according to a Reuters survey.
"If they raised the output ceiling then prices would go down and we don't want that," a Gulf OPEC delegate said.
Notably absent from this week's agenda are efforts to push for output constraints - even from hawks like Venezuela, which faces deepening budget woes at prices below $100 per barrel.
While oil ministers have maintained a relentlessly upbeat attitude this week, some analysts see dark clouds gathering.
The U.S. tight oil industry has been more resilient than many had expected, with falling costs helping sustain the revolution and possibly setting up another downward spiral.
"Balances show we are oversupplied and OPEC is in pedal-to-the-metal mode," said Bob McNally, founder and president of Washington-based consultancy The Rapidan Group. He said Brent crude could fall back to $50 a barrel.
In other business, OPEC appears set to grant Indonesia's request to rejoin the group after a more than six-year hiatus in its membership. Now a net importer of oil, Indonesia hopes to foster better dialogue between producers and consumers.