Oil prices edge higher in thin trade; OPEC eyed

Oil prices decline despite drop in US production

oil prices

Oil prices fell as US crude output dropped to its lowest since September, 2014.  Encana photo.

By Nia Williams

May 30 (Reuters) – Oil prices inched up toward $50 a barrel on Monday, although uncertainty ahead of an OPEC producer-group meeting later in the week was expected to cap gains.

The Organization of the Petroleum Exporting Countries meets in Vienna on Thursday and most analysts did not expect any changes in the group’s production.

While OPEC has been unable to agree on an output freeze to support prices, Iraq was the latest Middle East producer to raise its export quota ahead of the meeting, supplying 5 million barrels of extra crude to its partners in June.

“So far there’s pretty much a consensus that nothing will happen and that the same strategies will continue, which are basically produce as much as you want and go for market share,” said energy economist James L. Williams of WTRG Economics in Arkansas.

Price moves will be choppy in the run-up to the meeting, Williams added.

Brent crude futures settled up 44 cents at $49.76 a barrel, reversing losses from earlier in the day. There was no settlement in U.S. West Texas Intermediate, or WTI, crude futures because of the U.S. Memorial Day holiday, but at 1839 GMT WTI was up 27 cents at $49.60.

Trade was subdued because of public holidays in Britain and the United States, where Memorial Day is seen as the traditional start of U.S. summer driving season.

Vienna-based consultancy JBC Energy said global oil demand rose by 1.5 million barrels per day in January-April. That was stronger than many forecasts and stemmed from strong consumption in the United States, China and India.

U.S. crude output also dropped to its lowest since September 2014 after drillers cut rigs for the ninth week in 10 despite the recent rally in oil prices.

However, an expected rise in Canadian oil sands production could weigh on WTI. Suncor Energy is planning to ramp up output at its fields in Alberta this week after it was forced to shut them down earlier in May because of massive wildfires.

Outages because of wildfires in Canada and unrest in Libya and Nigeria helped to push oil prices to a seven-month high in recent weeks.

(Additional reporting by Ron Bousso in London and Henning Gloystein in Singapore; Editing by Lisa Von Ahn and Nick Zieminski)

Posted in: Energy News

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