Barclays lists what the cartel won’t do and tackles what traders are thinking

Members of the Organization of the Exporting Countries are expected to leave their oil-production ceiling unchanged at their semiannual meeting on Friday, but what they decide not to do is equally important.

Analysts widely expect the oil-producing cartel to stand pat on the 30 million barrels-per-day output ceiling it is had in place since 2012, even though various market estimates show that its members have been producing about one million barrels a day above that level.

Talk ahead of the summit has been centered on OPEC’s desire to defend its valuable market share. The cartel left its production target unchanged at its last meeting in November, despite a plunge in global oil prices LCON5, +0.27% CLN5, +0.05% and some analysts fear that if OPEC stands pat again, that’ll condemn the market to an oil-supply glut for years.

Retaining market share is obviously a key objective for OPEC and based on this chart from Barclays Research, it may have succeeded.

Still, analysts at Barclays warned that OPEC “will face significant challenges in achieving a likely impossible trinity of higher oil revenues, market-share preservation and robust long-term demand.”

OPEC ‘will face significant challenges in achieving a likely impossible trinity of higher oil revenues, market-share preservation and robust long-term demand.’

Barclays Research

Given that, Barclays offered the “top 10 things OPEC won’t do this week” — which also happens to double as a compilation of what’s likely on traders’ minds.

Here’s a rundown of some of them:

    Reduce its quota — It is highly unlikely, Barclays said, but an increase is possible to recognize the group’s current output above the target.

    Answer the hypothetical on everyone’s mind regarding Iran — It’s likely to take a “wait-and-see” approach, given the uncertainty tied to a potential deal with six world powers on Iran’s nuclear program.

    Target U.S. shale oil explicitly — In its fight for market share, the Saudis have said that it isn’t against anyone and that it supports market stability and the balance between supply and demand.

    Provide any price targets or guidance — OPEC must maintain the perception that the market is determining the price level.

    Gain agreement from a non-OPEC supplier to cut — Russia has sought to obtain observer status as an OPEC member, but Russia will continue to act in its own best interests.

If OPEC does as it is expected and “announces no action,” traders may “shed crowded long positions and prices could suffer as a result,” the Barclays analysts said.

By Myra P. Saefong/ Markets/commodities reporter