Oil prices rise toward $57/barrel ahead of OPEC meeting

Ivan Schwartz
September 23, 2017

Oil prices have risen slightly over the possibility of an extension to the OPEC-led output cut deal beyond March 2018 following a meeting of major producers in Vienna, Austria.

"I believe that January is the earliest date when we can actually, credibly speak about the state of the market", Russian Energy Minister Alexander Novak said.

Other ministers said a decision on extending cuts could be taken in November when Opec holds its next formal meeting.

The Venezuelan minister of Oil, Eulogio del Pino, highlighted the importance of cooperation between producer countries and valued as necessary to eliminate the control of the oil market by speculators.

The Energy Information Administration (EIA) on Wednesday reported that USA crude production rose to 9.51 million bpd in the week ended Sept.15 from 8.78 million bpd a week earlier.

OPEC and non-OPEC members are set to meet again to discuss a possible extension to their current oil production cut agreement.

. While too low a level of inventories would initially support prices with shale's growing pains delaying its supply response, it would nonetheless incentivize more investments by other producers and would undermine OPEC's goal of sustainably growing market share and revenues in our view.

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He said there were a "number of positives" in the market, including stock levels in industrialised OECD states in August that were 170 million barrels above the five-year average, down from 340 million barrels in January. This indicates tighter supplies.

The cartel and its partners continue to keep a close watch on USA production, and especially, US exports.

OPEC's rules mean these figures would only be discussed internally and the so-called secondary sources production estimates - compiled from third parties and published each month - would remain the only official way for measuring compliance, said two delegates, who asked not to be named because the talks were private.

The problem of a shortage of supply seems very far off today, given the swift turnaround in USA shale and persistently high levels of crude storage.

Thursday's unease among the trading community coincides, ironically, with news that Total SA, Vitol Group, and Mercuria Energy Group Ltd. are selling crude they hoarded in Saldanha Bay, South Africa, (one of the world's largest crude storage facilities) as the physical market tightens due to booming demand.

"Our colleagues (from Libya and Nigeria - TASS) said at the meeting of the monitoring committee today, that they are ready to freeze and even join the agreement to reduce production by 2-3% once they reach certain output level", he said.

Other reports by GizPress

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