Markets in the last month or so have been driven by speculations over the OPEC meeting scheduled for Wednesday.
Thomas Pugh of Capital Economics told CNBC-TV18 that the OPEC is likely to come out with a face-saving type of deal for around 6 months instead of agreeing to individual country ideas.
Even after the OPEC decision, crude production supply reducing looks slim.
Capital Economics see crude at near USD 45 per barrel by the end of this year. If no decision comes from OPEC, crude could slip below USD 40 per barrel also.
Below is the verbatim transcript of Thomas Pugh's interview to Manisha Gupta on CNBC-TV18.
Q: Let start with crude oil prices and that really has been quite choppy, markets are seeing a bit of a decline coming in that is because of the uncertainty, the clarity and the confusion that we still are looking at from the meeting tomorrow.
A: Even the last month or so really it has been purely driven by speculation around tomorrow’s Organization of the Petroleum Exporting Countries (OPEC) deal. I think it was yesterday or the day before that we saw Iraq come out some positive comments which sent the price soaring.
Saudi Arabia’s subsequent comments that cuts might not even be necessary sent prices back down again, so the markets really are just looking for any sort of insight into what ministers might be thinking and how that might influence the outcome of tomorrow’s meeting.
Q: If you look at both the scenarios on whether there is an agreement or not, in both the cases where do you see the crude oil prices headed?
A: We think that the most likely outcome is that there will be some sort of agreement, a face saving type deal if you will. I think it is quite unlikely that they will agree individual country quotas that they are likely to come out and say we are still committed as a group to bringing off production below 33 million barrels a day that this is a cut off x thousand barrels a day. It will last for possibly six months.