Oil prices edged higher on Thursday, with Brent settling above $50 a barrel the first time in seven months, after the latest drawdown in US crude stockpiles offset OPEC’s failure to set a ceiling for its output.
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But the market turned higher after the US Department of Energy reported the country s commercial crude oil inventories fell last week by 1.4 million barrels, though at 535.7 million barrels they remained at historically high levels.
As a result, Brent crude futures held above $50 per barrel on Friday, trading at $50.19 per barrel at 0647 GMT, up 15 cents from the last settlement and nearly double January lows.
The price of West Texas Intermediate oil, the US benchmark, settled up 0.3% to $49.17, even though oil ministers concluded their OPEC meeting Thursday in Vienna, Austria, without agreeing to cap petroleum output.
A final statement from OPEC said that since its December meeting “crude oil prices have risen by more than 80 percent, supply and demand is converging and oil and producer stock levels in the OECD (industrial economies) have recently shown moderation”.
Iran’s oil minister has rejected suggestions Opec will agree a production cap at a meeting due to take place in Vienna, saying his country backs a return to a national quota system.
“We will be very gentle in our approach and make sure we don’t shock the market in any way”.
However, although prices dropped to more than $25 the barrel last January compared to a price of $100 in 2014, OPEC, headed by Saudi Arabia, has chosen not to decrease production. “The ongoing evidence that demand is picking up in the US and that there is a supply side response, is keeping the market supported”.
“Without country quotas, OPEC can not control anything”, Iranian minister of petroleum Bijan Zanganeh told reporters, who said the pre-sanction quota – 14.5 percent of OPEC’s general output – was fair for Tehran.
The cartel of oil exporting nations broker off the meet in Vienna, without any new agreements.
Analysts said ahead of the meeting that the stronger Opec members such as Saudi had less incentive to freeze or cut output because oil prices have rebounded from a multi-year low of below $28 per barrel in January.
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Tensions between the Sunni-led kingdom and the Shi’ite Islamic Republic have dominated several previous Opec meetings.
