Oil prices rise ahead of OPEC out­put meet­ing

The China Post - - WORLD BUSINESS -

Oil prices rose in Asia Fri­day but gains were capped be­fore a key meet­ing of the OPEC car­tel, which is ex­pected to main­tain its cur­rent pro­duc­tion lev­els de­spite an over­sup­plied global mar­ket.

Amer­i­can bench­mark West Texas In­ter­me­di­ate for July de­liv­ery edged up two cents to US$ 58.02 while Brent crude for July gained eight cents to US$62.11 in af­ter­noon trade.

“It seems like the same rhetoric will con­tinue (and) OPEC is not go­ing to change their pro­duc­tion lev­els,” Ni­cholas Teo, mar­ket an­a­lyst at CMC Mar­kets in Sin­ga­pore, told AFP.

“This could stoke fears of the over­sup­ply sit­u­a­tion in the mar­ket and we ex­pect oil prices to pull back slightly.”

Of­fi­cials from the 12-na­tion Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries in Vi­enna for a gath­er­ing later Fri­day on pro­duc­tion tar­gets have ex­pressed some frus­tra­tion with cur­rent low prices, but gave no sig­nal they would move to cut out­put.

At its last meet­ing in Novem­ber, the car­tel, which pumps around 30 per­cent of the world’s oil, kept its of­fi­cial pro­duc­tion tar­get of 30 mil­lion bar­rels per day, a move seen as try­ing drive high-cost Amer­i­can shale oil pro­duc­ers out of the mar­ket.

That de­ci­sion ini­tially con­trib­uted to prices slump­ing to six-year lows in Jan­uary but some an­a­lysts say the strat­egy, backed by OPEC king­pin Saudi Ara­bia, has paid off as Amer­i­can shale oil pro­duc­ers have been squeezed and crude has re­cov­ered in re­cent months.

Teo said deal­ers are also look­ing ahead to the May Amer­i­can jobs re­port later Fri­day, which an­a­lysts ex­pect to show a gain of 225,000 posts.

“We ex­pect pay­roll num­bers to go up, and this will in turn firm up the dollar and sub­se­quently make dollar-priced crude more ex­pen­sive,” said Teo.

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