“OPEC is producing at record high levels and the market is paying them to do it, with the way prices have risen today despite what the Saudi minister said”, said Tariq Zahir, crude trader at Tyche Capital Advisors in NY.
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USA crude’s West Texas Intermediate (WTI) futures rose 33 cents, or 0.7 per cent, to $47.1.
US West Texas Intermediate was trading lower early on Friday at $47.23 a barrel on the New York Mercantile Exchange, while Brent crude was trading at $49.46, 21 cents lower than its previous close, on the London ICE Futures Exchange. Saudi Arabian Energy Minister Khalid Al-Falih said many countries are already producing at their capacity and have limited room to increase in the short-term.
OPEC member Iran, which has been ramping up production to its pre-sanctions levels despite the recent supply glut, said on Friday that it would cooperate with other producers to stabilize oil markets, adding, however that it expected others to respect its individual rights.
Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC, in reference to the aftermath of the last meeting earlier this year, “I clearly saw there was a difference in the Saudi tone; Saudi was willing to convey that they care about OPEC, they care about the collective cartel”. This gave the desert kingdom a 14-percent market share in China’s oil market, eking out 0.4 percent more than Russia’s exports to China, which is still breathing down the Saudis’ necks in this part of the world, exporting an average of 1.02 million bpd in the seven-month period.
Supply disruption and increasing global demand pushed the price of brent crude over $50 in May.
The International Energy Forum, comprising 73 countries that account for about 90% of the global supply and demand for oil and natural gas, will meet in Algiers on September 26-28.
There is speculation that OPEC and other producers led by Russian Federation will agree to output curbs at the meeting. [EIA/S] In refined products, stocks around the world are also brimming as demand slows while refinery output remains high. Iran had ruled out a ceiling on its production until it recovered the output levels it had before the US and European Union tightened worldwide sanctions on its oil industry in 2012.
High storage levels are also weighing on the market.
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“It’s not just the matter of a production freeze or a cap, but there are geopolitical concerns involved too, especially when it comes to Iran and Saudi Arabia”, he said.
