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The nation, which has long played a key role inside the cartel, will focus on boosting natural-gas production

Qatar said it plans to leave the Organization of the Petroleum Exporting Countries, a surprise decision for a member that has long played a key role inside the cartel, but has more recently clashed with de facto leader Saudi Arabia.

Qatar is a small oil producer, but has in recent decades become a natural gas giant. Monday, ahead of a planned meeting of OPEC later this week, it said it was leaving the group to concentrate on boosting its gas production. The move comes as the cartel is struggling with a response to falling oil prices, and pressure from the U.S. to keep them low.

Qatar Energy Minister Saad al-Kaabi said the country would withdraw from the organization by January 2019 at a press conference Monday, state-run company Qatar Petroleum said on its Twitter account. An OPEC official in Vienna confirmed it was aware of the decision.

The move “reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production from 77 million tons per year to 110 million tons in the coming years,” he was quoted as saying.

Qatar’s withdrawal means OPEC will lose a key diplomatic go-between. Though it has historically aligned itself with a Saudi-led group of Gulf monarchies that sought moderate oil prices, the Emirate has also worked to mend fences between the faction and hard-liners such as Iran and Venezuela.

Qatar spearheaded an attempt to freeze oil output in April 2016 at a Doha summit. That effort collapsed when Saudi Crown Prince Mohammed bin Salman ordered the kingdom’s delegation to pull out of the production deal. The turnaround left Qatar frustrated with what turned out to be the de facto Saudi ruler’s increasing interference in OPEC, a Qatar official said subsequently.

The withdrawal comes as Doha has faced an economic blockade from OPEC’s kingpin and neighbor Saudi Arabia over allegations it finances terrorism—which it has denied. Mr. Kaabi said the withdrawal wasn’t connected to the Saudi restrictions, according to Reuters.

Qatar has been unhappy about what it perceives is meddling of Prince Salman in OPEC affairs, a Qatari official has previously said. It also sees little benefit from cutting production when prices are low, that official also said previously.

Qatar is one of OPEC’s smallest producers, with an output of about 600,000 barrels a day, making its impact on the group’s market share limited. But while members such as Indonesia have left in the past, the Emirate is one of the group’s oldest participants, having joined OPEC in 1961, one year after its creation.

But Qatar’s pullout after 57 years also comes as the organization is facing significant headwinds. President Trump has criticized the group for increasing prices and threatened to support antitrust legislation against OPEC. The Saudi think tank also recently looked into the group’s future if Saudi Arabia was to pullout from the group and Iran has criticized OPEC’s decision to replace its oil ahead of returning U.S. sanctions.

Oil prices rallied on Monday, with Brent crude, the global benchmark, rising 4.8% to $62.33 a barrel. This past weekend Russia and Saudi Arabia agreed to extend efforts by OPEC. The recovery follows the sharpest monthly slide for oil prices since October 2008, with U.S. crude and Brent each falling 22% last month.

Chairman and chief argue their collaborative relationship is more asset than risk

Nestlé’s leadership has defended its governance arrangements against criticism from an influential activist investor, insisting that the collaborative relationship between the chief executive and chairman was not hindering the Swiss food company’s growth plans.

Corporate governance practice in the UK and the US typically frowns upon chief executives becoming board chairman and overseeing their successors. Nestlé has had such an arrangement — which is more common in European countries — for decades.

But such governance at Nestlé has been criticised by Daniel Loeb’s hedge fund Third Point, which in June 2017 made it the largest bet in its portfolio, taking a 1.25 per cent stake now worth $3.4bn.

Third Point has said chairman Paul Bulcke — himself the food and drink group’s chief executive from 2008 to 2016 — “seems too comfortable with the status quo” and argued that it risked “holding up the pace and magnitude of change”. 

Speaking in a joint interview with current chief executive Mark Schneider, Mr Bulcke said that he gave the CEO room to work independently and provided support when needed.

Mr Schneider — Nestlé’s first outside leader since 1922 and who is aiming to rebuild sales growth and improve profitability by 2020 — argued that Nestlé had been well served for decades by its long-term mindset and approach to governance. 

“Frankly, I am grateful I can turn to someone to give me perspective,” said the 53-year-old German executive who used to head healthcare group Fresenius. “Part of the challenge of being CEO is you deal with a lot of competing interests and there aren’t that many people you can talk to when you have a question.” 

Nestle’s board, particularly its independent vice-chairman, acts as a strong check on the pair, Mr Bulcke insisted. He cited Nestle’s recent decision to put up for sale its skin health unit — a reversal of an investment he made during his tenure — as proof he was not out to shield his legacy. 

“There is nothing more stupid than holding blindly on to something,” the chairman said. 

But some investors have demanded faster change. Two-thirds of respondents polled in an Exane survey in October said they would vote against Mr Bulcke’s reappointment, and 75 per cent would support Third Point if it nominated a board candidate. 

A Third Point spokesperson said it had “no present plans” to oppose Mr Bulcke. 

The hedge fund recently ended a tough campaign at Campbell Soup with an agreement that will give it two seats on the board and a role in the choice of its next chief executive. 

Mr Schneider said: “We are in a very different spot than Campbell’s, just compare the recent performance of both companies.”

Pressure from Third Point also led to the break-up of US aerospace manufacturer United Technologies into three companies. The activist investor said in a letter to clients in May that such a separation of United Technologies would “unlock in excess of $20 billion of value, net of separation costs”, and it also criticised the company’s leadership.

Asked whether Nestlé would consider allowing Third Point on its board, Mr Bulcke declined to answer. “We are open to all ideas and then we judge what is best for the company.” 

Konstantin Stoev, an analyst at T Rowe Price, a top 10 shareholder of Nestlé with a 0.36 per cent stake across various funds, believes that board changes would be counterproductive given the steps Nestlé was taking. 

“We support what Nestle’s board and senior management are doing, at the pace that they are keeping,” said Mr Stoev. 

Third Point has been pushing Nestlé to sell its 23 per cent stake in cosmetics maker L’Oreal and to use the proceeds to buy back shares. Mr Bulcke said it was “something active on the board’s agenda” and that it would “take the right action at the right time”. 

Mr Schneider added: “The less we lay out the precise factors and criteria, the better. This is one where you have to trust the governance structure to do its job professionally.”

A month since raising crude forecasts, banks reduce expectations for both the global and U.S. oil benchmarks

LONDON—Banks in November lowered their forecasts for oil prices in 2019 amid signs of rising global supply and a price rout in which crude has lost more than 30% since the start of October.

Brent crude, the global oil benchmark, is now expected to average $76.98 a barrel next year, down from prior forecasts of $77.58, according to a poll of 11 investment banks by The Wall Street Journal. Expected prices for West Texas Intermediate, the U.S. standard, experienced a bigger drop, to $69.98 a barrel in 2019 from earlier forecasts of $70.81.

The latest poll results come just a month after banks had raised forecasts for crude prices on expectations that reimposed U.S. sanctions on Iran’s oil industry starting in November would significantly reduce global supplies, tightening the market.

But supply outages from Iran have so far proved less consequential than feared, in part because the Trump administration decided to grant temporary waivers to the world’s main buyers of Iranian crude.

At the same time, crude output has risen to record levels from the world’s largest producers—the U.S., Russia and Saudi Arabia—triggering a massive selloff that has plunged both crude benchmarks into bear territory and brought them to their lowest levels in over a year.

Brent and WTI have each lost more than 30% since climbing to four-year highs at the start of October. On Thursday, Brent was trading at $59.90 a barrel, while WTI was trading at $51.53 a barrel.

“The negative price reaction is as severe as the 2008 financial crisis and the aftermath of the November 2015 OPEC meeting, when the group decided not to act in the face of a very oversupplied market,” said Jason Gammel, oil analyst at Jefferies. But he added that the “oil price rout has been driven by accelerating oversupply, which should moderate over the coming months as Iranian exports drop and Saudi production moderates.”

The Organization of the Petroleum Exporting Countries, de facto led by Saudi Arabia, and its allies outside the cartel, led by Russia, are facing growing pressure to engineer a new agreement to curb output to rebalance the market and bolster prices. The group is set to convene in Vienna next week.

Saudi Arabia said earlier this month it would cut exports by 500,000 barrels a day in December. But it is uncertain whether Saudi Arabia will significantly reduce production in coordination with its partners while the Trump administration pressures the kingdom to keep output high and prices low.

There is also a lack of clarity from Russia—currently the world’s largest producer of crude—which has alternately signaled willingness to cut output while indicating it is content with crude price around $60 a barrel.

Still, Martijn Rats, an oil analyst at Morgan Stanley, predicts OPEC will likely reach an agreement to cut production and “manage the market in 2019.” In that case, “Brent prices are likely to recover into the $70s,” he said.

OPEC and 10 producers outside the cartel, including Russia, agreed in late June to begin gradually ramping up production after more than a year of holding back output. The group had agreed in late 2016 to implement coordinated cuts to rein in a supply glut that had weighed on prices since the oil price crash of 2014.

The initial deal had helped to bolster crude prices by more than 50% since the start of last year, until the recent selloff wiped away many of those gains.

Stocks jumped on Monday alongside China’s yuan and Treasury yields after the U.S. and China declared a truce in their trade war. Oil surged on optimism producers will address a glut in global supply.

Shares soared from Sydney to Shanghai and futures on U.S. and European benchmarks climbed more than 1.5 percent after Presidents Donald Trump and Xi Jinping agreed to hold off on the introduction of new tariffs and intensify trade talks. The Aussie and emerging-market currencies climbed against the dollar. Ten-year Treasury yields rose back above 3 percent.

The euro strengthened on news in Italian media that the government may accept a lower deficit target. Crude climbed following a Saudi Arabia-Russia agreement and plans for a supply cut from Canada’s Alberta province.

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