Oil was trading higher at the start of the OPEC meeting and OPEC Secretary General Abdalla Salem el-Badri said that there was a very positive atmosphere among the cartel’s members for the first time in many months. The group failed to agree on an oil cap Thursday.
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“The increase in the rig count as prices near the $50 per barrel range is clearly indicative of the elasticity of USA production and speaks to the tremendous efficiency gains reaped by the U.S. producer community over recent years”, said Michael Tran, director of energy strategy at RBC Capital Markets in NY.
Brent crude, the global benchmark, was lately down 1.29 percent to $49.08 a barrel.
It added that member countries “confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers”.
Bob Minter, analyst at Aberdeen Asset Management Investment, said: “This should have been an easy meeting to re-establish Opec relevance, but they missed the opportunity”.
The reaffirmation of the so-called “hands-off policy” was confirmed to reporters by individual delegates of the 13-nation cartel, which controls production of about a third of the world’s oil. It hovered around $50 a barrel yesterday.
Brent crude oil futures for delivery on August 1 dipped below the $50-per-barrel mark to trade Thursday at $49.25, down 47 cents, or nearly 1%, on their Wednesday close.
U.S. West Texas Intermediate (WTI) crude futures were down 30 cents at $48.87.
But it bounced back later in the day rising above $50 per barrel after figures showed that U.S. stockpiles have fallen in the last week.
Animosity between Saudi Arabia and Iran – bitter regional OPEC rivals engaged in proxy conflicts in Syria and Yemen – means that any agreement to cut output is highly unlikely in any case.
“It is bearish short-term for oil prices”.
The ministers also agreed to admit Gabon as the 14th member, effective July 1.
“We feel the market is rebalancing as we speak”, Mr Falih said. Time is needed to discuss this and all OPEC member states should accept the creation of this model.
In a rare compromise, OPEC also decided unanimously to appoint Nigeria’s Mohammed Barkindo as its new secretary-general after years of friction over the issue.
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“To come up with a number is very hard to do”, the Organisation of Petroleum Exporting Countries’ secretary-general Abdalla El-Badri told a news conference.
