Oil prices were mixed in trading on Thursday with US WTI rising by pennies and OPEC-aligned Brent crude falling over 2 per cent. The oil market is waiting to see if the OPEC supply cut agreement will be relaxed. Repsol photo.
Brent oil prices down $1.69/barrel in session
Oil prices were mixed in trading on Thursday with Brent crude falling over 2 per cent ahead of OPEC’s meeting in Vienna where the cartel is expected to agree to increase its production to help stabilize the oil market and crude prices.
Brent crude was down $1.69/barrel, ending the day at $73.05/barrel. US WTI rose 4 cents to $65.75/barrel. The Canadian Crude Index dropped by 53 cents to $39.61.
US WTI crude for August delivery slipped 17 cents to $65.54/barrel and fell 68 cents from the July contract’s expiry on Wednesday at $66.22.
As well, front-month WTI jumped as much as 71 cents a barrel over the second month, the biggest premium since October 2014. According to Reuters, the increase came as the July contract expired Wednesday and just after the US Energy Information Administration reported US crude stocks fell by 2.3 million barrels last week.
This decline in crude inventories could calm some concerns about rising US production outpacing demand.
Meanwhile in Vienna, OPEC members are having a hard time finding common ground concerning a possible increase in production. Saudi Arabia has been warning of possible supply shortages and price rallies, but Iran is standing firm against increasing output.
“We need to release supply to the market,” Saudi Arabia’s Energy Minister Khalid al-Falih told reporters in Vienna. “How much oil do we need? … Around 1 million (barrels per day) probably.”
Ecuador’s Oil Minister Carlos Perez says he believes the group will agree to boost their production by about 600,000 b/d.
According to Reuters, Iran’s Oil Minister Bijan Zanganeh says he believes OPEC cannot reach a compromise decision.
“I don’t think we can reach agreement,” Zanganeh told reporters in Vienna. “We firstly need to discuss and decide about the main issue inside OPEC. OPEC’s decision is so important – after it we should coordinate everything with the Russians.”
Despite Iran’s contention that no deal is possible, Harry Tchilinguirian, head of oil strategy at BNP Paribas told Reuters Global Oil Forum that he believes OPEC and Russia will come to an agreement that will see a small increase in global oil production.
“It would seem that an aggregate increase in production for OPEC+ of between 500,000 b/d and 1 million b/d is the range that is being considered,” Tchilinguirian said.