Oil prices buoyed by OPEC talks Friday
Oil prices retreated from their near five-month highs on Tuesday as investors await data expected that is to show an increase in US crude stocks in the wake of Hurricane Harvey.
By 1:47 p.m. EDT, benchmark Brent crude had fallen by 55 cents to $54.93/barrel and US WTI had dropped by 54 cents to $49.37/barrel.
However, the market was buoyed ahead of a meeting between OPEC and some non-OPEC members on Friday to discuss the progress of their supply cut pact.
According to Reuters, Iraq, OPEC’s second-biggest producer, said the cartel will discuss a number of options concerning the agreement, including an extension of the deal beyond the March expiration date and a further output cut.
Representatives from Nigeria and Libya will also attend the meeting. The two countries were exempted from the pact due to years of unrest that had severely impacted their oil industries. This year, however, rising output from the two African nations has been a factor in stalled oil price gains. Some believe Libya and Nigeria may now be included in the OPEC deal.
“It feels kind of like positioning ahead of tonight’s report but there’s not a lot of action behind the move,” Phil Flynn, analyst at Price Futures Group told Reuters.
On Tuesday afternoon, the American Petroleum Institute will release its weekly US crude stock data. The United States Energy Information Administration releases its oil inventory data on Wednesday morning.
Analysts predict an increase in crude stocks of 2.9 million barrels over last week as refineries restart production and exports out of US Gulf Coast ports resume following Hurricane Harvey.
Hurricane Maria is not expected to impact the Gulf Coast, but cargoes have been shifted around the storm, possibly dampening crude demand and disrupting maritime trading.
Earlier this week, the International Energy Agency has warned that growing demand for crude and a plunge in upstream investment may lead to a supply crunch by the early 2020’s.
