OPEC magazine op-ed that fuelled oil rally baffles insiders

LONDON — A commentary written by a public relations team in a publication issued by the Organisation of the Petroleum Exporting Countries (OPEC) helped oil prices jump and prompted speculation over a possible shift in output policy, to the bafflement of some OPEC insiders.

The article on Monday in the OPEC Bulletin, a magazine issued by OPEC’s Vienna headquarters, said downward pressure on prices due to higher production “remains a cause for concern” and OPEC “stands ready to talk to all other producers”.

While the 799-word article helped add another 8 per cent to oil’s three-day surge, by Tuesday it seemed clear there was no sign of a significant shift in OPEC policy or any indication of a fresh push to shore up markets, analysts and OPEC insiders said.

A Gulf delegate said the bulletin reflected genuine concern in OPEC about falling prices but it did not signal a policy shift or pending production cut.

“I see it as a message sent to the market that we are willing to talk to non-OPEC, we are concerned about prices and we are not closing our eyes to what’s going on,” he added

Another OPEC insider said: “I found it surprising,” referring to the jump in prices on Monday. “The bulletin wasn’t saying anything new.”

The bulletin, a glossy magazine, is written by OPEC’s public relations department based in Vienna and lists 12 editorial staff. It is reviewed by senior officials at the OPEC secretariat before publication.

In the magazine, the following disclaimer appears under the heading “editorial policy”: “The contents do not necessarily reflect the official views of OPEC nor its member countries.”

While the Bulletin has included similar commentaries on the market before, in April it criticised unidentified non-member countries for not cooperating in propping up prices, it does not tend to move oil prices.

Traders are wondering whether OPEC and its de-facto leader Saudi Arabia will stick with the policy adopted in 2014 of defending market share, even after the slide in oil prices to their lowest in more than six years last month.

While Saudi Arabia has not commented publicly, some had seen the bulletin as indicating a shift.

“Yesterday the market got somewhat excited by the editorial of the OPEC Bulletin,” said Olivier Jakob, oil analyst at Petromatrix. “This was read by some market participants as making a first overture for a change of policy.”

The excitement appeared to be fading on Tuesday as Brent oil traded down 6.5 per cent by 1507 GMT.