Indian Equity Bulls Should't Anticipate Further Crude Price Decline

As things stand now, OPEC is very unlikely to cut production. According to the Wall Street Journal, Venezuela's foreign minister asked to see Saudi Arabia's top oil official at a climate-change conference on Margarita Island, off the South American coast. Ali al-Naimi, the Saudi oil minister, was expecting a plea to reduce oil output and bolster markets. But according to sources, Saudi Arabia won't cut production on its own. Mr. Naimi is expected to repeat the message to delegates at a meeting of the Organization of the Petroleum Exporting Countries in Vienna later this month, according to Saudi officials.

But history tells us something different. OPEC currently pumps about half a million more barrels a day than its target of 30 million barrels a day, according to the International Energy Agency. Members are considering a commitment to rein in production to the group's target level, OPEC delegates said, effectively cutting production sharply. Since 1984, the cartel has reduced output 11 times to address oil price falls, according to Deutsche Bank, with cuts totaling 1.24 million barrels a day, on average. This would help its member countries come closer to balancing their budgets. For example, Saudi Arabia needs Brent to average $99 a barrel to balance its budget this fiscal year, Deutsche Bank estimates.

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