OPEC Reaps Benefits By Staying Together: JP Morgan

OPEC group members reap benefits by staying together amid rumors about issues within the group, Christyan Malek, Global Head of Energy Strategy at JP Morgan, said in a CNBC interview.

• “This theme around OPEC wanting to break up or issues within OPEC has been quite persistent over several months, if not years. And having been there and watched the dynamics between the ministers and also just how they’ve been so disciplined. I think one of the key points that we’ve made through our research consistently is that the OPEC share of demand growth is growing, they have nothing to worry about”, Malek said.
• “Saudi has played its cards extremely well in terms of one plate is has build its spare capacity and on the other its ensuring that prices stay stable”, he added.
• “Within that context, whilst having seen the dynamics within the group, one of the things that I have noticed is that they have one very strong common ground which is to ensure prices stay stable, allowing them to be able to increase their spare capacity”, Malek added.
• “So in theory, if you break up, what is the upside of doing that? If you are trying to build your spare capacity, if you are trying to underwrite your own economy that makes total sense to create that within the group because ultimately you are seeing prices improve and you are seeing inventories fall and you reap the benefits”, he said.