Volatile oil prices ahead as OPEC’s meeting looms closer
RECENTLY, US crude oil logged its first weekly gain in a month on hopes that the Organisation of Petroleum Exporting Countries ( OPEC) would extend their output- cut deal at the upcoming meeting in Vienna later this week ( May 25).
However, prices may be volatile following speeches and comments from big producers ahead of the meeting.
As of Thursday, NYMEX oil June contract strengthened by US$ 1.51, or 3.16 per cent, at US$ 49.35 a barrel after climbing as high as US$ 49.88 per barrel.
Brent oil July contract settled at US$ 52.51, rising US$ 1.67, or 3.28 per cent.
According to the Energy Information Administration ( EIA), crude oil stockpiles fell by 1.753 million barrels during the week ended May 12, a contrast from the 882,000 build reported by API.
Meanwhile, industry research group Baker Hughes said the number of rigs drilling for oil in the US increased by nine to 712 for the week ended May 12.
Recently, attention has been mostly placed on OPEC and its allies.
Investors highly anticipate an extension on its output- cut plan.
Members of the cartel will be having a meeting on May 25 in Vienna to discuss on the possibility of extending the plan.
Should the agreement pass, it would keep the current output caps in place through the first quarter of 2018.
However, oil prices were pressured on Tuesday as a report from the International Energy Agency ( IEA) warned that an extension of OPEC’s output- cut plan would not be sufficient to rebalance the global oil market.
The report offset expectations that the OPEC and its allies will extend production cuts into 2018.
Nevertheless, prices were largely supported on Wednesday after the EIA reported a sixth straight weekly decline in US’ crude inventories.
This week, we expect prices to move slightly higher ahead of OPEC’s meeting in Vienna on May 25.
Meanwhile, prices may be volatile following speeches and comments from big producers ahead of the meeting.
The current support is at US$ 47 per barrel and resistance at US$ 52 per barrel. At the moment, OPEC and its allies will mainly focus on ideas for the market’s outlook.