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Oil prices mixed ahead of OPEC meeting on Friday

Oil prices

Oil prices were fairly steady on Thursday as investors await the outcome of OPEC’s meeting in Vienna on Friday. Chevron photo.

Oil prices up 15 per cent in last three months

Oil prices mostly held steady on Thursday as investors and traders wait to see if participants in the OPEC supply cut pact will agree to extend the deal that is set to expire in March.

By 1:19 p.m. EDT, Brent crude was up six cents to $56.35/barrel and US WTI was down 15 cents to $50.54/barrel.

“We’re a little rangebound and choppy, not too much of a direction,” Tariq Zahir, a trader with Tyche Capital Advisors told Reuters.

Oil ministers from OPEC nations, Russia and other pact members will meet in Vienna on Friday.  It is believed they will discuss a possible extension of the supply deal which cut 1.8 million barrels per day (b/d) of output to support prices.  They are also expected to consider monitoring exports to assess pact compliance.

Reuters reports many analysts expect the deal will be extended, but they were concerned that at current price levels, some producers may be tempted to boost their production.

If prices rise much above current levels, “compliance looks to be a bit of an issue”, John Kilduff, partner at Again Capital LLC told Reuters.

Oil prices have jumped 15 per cent in the past three months as the OPEC deal helped cut the global crude glut.

 “The bull run in the oil market is running out of steam as unease builds ahead of tomorrow’s OPEC/non-OPEC meeting,” Stephen Brennock, analyst at London brokerage PVM Oil Associates told Reuters.

Zahir is concerned that after the recent increase in oil prices, there are signs that output is rising, especially in the US shale fields.

As well, hurricanes in the US Gulf Coast area have bumped up inventories as some refineries in the US have been shuttered by flooding and are struggling to restart.

According to the US Energy Information Administration, US crude production has risen to 9.51 million b/d, up from 8.78 b/d.

Kilduff says rising production in the United States is “a reminder to the market that OPEC has a significant problem on its hands from the continued rise in shale output.”

 

Posted in: Energy Financial

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