There is rise in today’s oil price as Saudi Arabia appears to put forward a new proposal to reduce OPEC production by 1 mn barrels per day in 2016. One main objective is to increase discipline within the cartel.
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Analysts say the Saudi approach has definitely changed – though a reduction will depend on the stance of several other major oil producers.
“Even if the report is credible, there will be a long way to go before the market could have any reasonable assurance that an agreement was possible and that it could be adhered to”, Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. The EconoTimes content received through this service is the intellectual property of EconoTimes or its third party suppliers. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.4% at $40.51 a barrel.
The Energy Information Administration said the USA commercial stockpiles of crude oil, gasoline, diesel and other fuels last week soared above 1.309 billion barrels, a fresh record. “After the full return of Iran to the market, we are ready to participate with OPEC members for making a new ceiling” on crude output, he said.
Oil markets rose slightly, although traders remained cautious. In London, Brent crude was going for $43.37 a barrel, up more than 2 percent since the day before.
Outside of OPEC, Russia alone pumped out 10.7 million barrels of oil a day in November, while on Thursday it again insisted that it would not be cutting back its own output to help the cartel. It’s down about 500,000 barrels a day from its peak a year ago.
Saudi Arabia will propose a deal to balance oil markets, including challenging demands on Opec members Iran and Iraq to limit production growth, as well as the involvement of non-Opec producers such as Russian Federation, media reported. The Saudi plan would also require Iraq – which has ambitious expansion plans – to freeze production at 4 million bpd and would also curb Iranian output just as it prepares to for a post-sanctions export boom.
Crude Oil prices dropped by more than four percent Wednesday, tumbling below $40 per barrel for the first time since August.
Crude oil prices extended gains on Friday, as the dollar slumped against the euro, although market focus is fixed on an OPEC meeting in Vienna where the group is expected to reiterate its high output strategy. ICE gas oil changed hands at $400.50 a metric ton, little changed from the previous settlement.
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A strong dollar, lifted by the prospect of a Federal Reserve rate hike, has kept oil prices weak, as it makes greenback-dominated contracts such as crude futures more expensive for those holding other currencies.
