“The rumour mill around producer cooperation has resumed, spurred by recent comments from Saudi Arabia’s oil minister, allowing oil prices to gain”, French bank BNP Paribas said.
Advertisement
As in the run-up to previous meetings, investors and traders will hang on every twist and turn in the words of oil ministers in the six weeks between now and the meeting at a forum in Algeria on September 26-28, trying to work out if a deal is likely. Despite the dip, prices are still up over 17 percent since early August and remain not far off a five-week high of $49.36 a barrel reached the previous day. Major producers like Russian Federation and the Saudi Kingdom are ramping up production.
Oil prices eased in Asia trade on Tuesday but held above $45 a barrel as the market weighed the possibility of major producers reaching an agreement at a meeting next month to freeze output.
The fight for market share among key OPEC members has made market watchers doubtful of such producers’ sincerity in reining in oversupply.
Saudi Arabia, now do not have any nuclear power reactors while Russia has built and has years of experiencing in constructing nuclear reactors in a statement by the Russian Energy Minister.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative. Just this year, an agreement to promote the peaceful use of nuclear energy was signed by the two countries last March.
The progress in crude prices follows speculation that OPEC members may be discussing a production freeze in their meeting next month, after a rise of almost 20% in only two weeks for the same reason.
But to say the signals being sent by concerned parties in advance of the Algeria meeting are mixed would be an understatement: sources in Saudi Arabia, for example, are claiming the kingdom could boost its output in August to a new record level of as much as 10.9 million bpd and overtake Russian Federation, which is the world’s top producer.
“Crude oil rose to a four-week high as speculation continued to mount that OPEC would discuss a potential cap on production at an upcoming meeting between the members of the group”.
Saudi output was at a record 10.67 million barrels per day in July. Talks on a global oil production level freeze collapsed in April after Iran refused to reduce its output levels.
Crude oil prices migrated toward positive territory after steep overnight losses Wednesday emerged as analysts mulled the prospects of OPEC price action.
After markets closed Tuesday, the American Petroleum Institute said that USA oil inventories fell by 1.0 million barrels in the week ended August 12.
Advertisement
USA petrol stockpiles also fell 2.7 million barrels, more than a million barrels than forecast.
