This argues against another significant drop in the price of oil.
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Oil prices extended losses on Wednesday after industry data showed a rise in U.S. crude stockpiles, supporting oversupply concerns.
Any talk about a new oil-production freeze is premature and amounts to wishful talking up of the market as long as Russia, Saudi Arabia and Iran keep boosting output, said Mohamed Ramady, a London-based independent analyst and former professor of economics at the King Fahd University of Petroleum and Minerals.
The cartel has been pumping relentlessly for the last two years, aiming to defend its market share despite the collapsing oil prices. “In Asia, margins continued to decline due to oversupply at the top and middle of the barrel”.
“Renewed attempts at verbal intervention by OPEC will help bolster oil market sentiment”.
The Energy Information Administration’s (EIA) released its weekly inventory report today. Total production in the United States, including crude and other forms, is expected to drop to an average of 13.6 million barrels a day this year, a drop of nearly 3% compared to 2015, according to the report.
“At 523.6m barrels, United States crude oil inventories are at historically high levels for this time of year”, the EIA wrote in its weekly report. According to Baker Hughes, the rig count has shown an increase for sixth consecutive week. The draw, amid U.S. East Coast refinery runs hitting 2011 lows, exceeded expectations for a gasoline drawdown of 1.1 million barrels.
Saudi Arabia and Iran are showing no letup in their market share war, just days after OPEC announced an informal meeting to discuss ways to stabilize falling prices. Casting light upon the previous meetings, it has been said that while some members such as Venezuela, Qatar, and Russian Federation show their support to cut back on output levels, other key players such as Iraq, Iran, and Saudi Arab – the de facto leader have shown resilience on output cuts since long.
OPEC will hold informal talks at a conference in Algiers next month, as members constantly discuss ways to stabilize the market, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said August 8. The group met in April but the discussions fell apart and considering the outcome trend in the past. They include an Iran now resurgent after the end to sanctions, a Russian Federation pumping near record levels and a USA that began selling crude overseas for the first time in 40 years.
Al-Sada further added that the decline observed in oil prices and the current market volatility is only temporary. The price for Brent crude oil was up 0.5 percent to open at $45.22 per barrel.
As per a survey conducted by the Wall Street Journal, analysts cited EIA to report the fall in United States crude stock piles by 800,000 barrels last week while gasoline inventories dropped 800,000 barrels.
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The main consolation for those wishing for an upturn in the oil sector was that inventories of gasoline and distillates fell back, with gasoline supplies down 2.8mln barrels and distillate reserves 2mln barrels lower.
