But oil prices recovered after the U.S. Energy Information Administration said Thursday morning that U.S. crude oil inventories fell by 1.4 million barrels in the week ending May 27. It’s a sign of continued dissension within OPEC as well as confidence that its strategy of all-out production is working to rebalance the markets.
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US West Texas Intermediate (WTI) crude futures were trading down 9 cents at $49.08.
The oil cartel wrapped up its summit in Vienna on Thursday by deciding not to change its output policy.
Oil producer Saudi Arabia was said to have been reconsidering output ceilings – which it nixed last December as it proceeded to boost its production capacity – as a means to spur oil prices to increase. He insisted Tehran deserved a quota – based on historic output levels – of 14.5 percent of OPEC’s overall production.
“We will be very gentle in our approach and make sure we don’t shock the market”, Fatih said at OPEC headquarters before the meeting began.
A flexible ceiling also could address Iranian resistance to curbing its output.
OPEC failed to agree on a new production ceiling at its biannual meeting in Vienna Thursday. They also pointed to falling production in the USA, where output from shale formations has fallen under the weight of collapsed prices.
But in a statement, Opec said both members and non-Opec producers needed to work together to bring market stability. “Non-OPEC supply has fallen and OPEC has gained market share”, BNP Paribas said.
“It runs counter to the longtime stance of his predecessor, Ali al-Naimi, who presided over an era when OPEC was largely content to restrain production to try to drive prices up”, the newspaper added. Iran’s oil minister said yesterday that since the deal with western powers in January, production has risen back to near the 4 million bpd level which prevailed before nuclear-related sanctions were imposed in 2012. United States production fell for a 12th week and crude stockpiles dropped by 1.37 million barrels, according to a report from the Energy Information Administration on Thursday.
“It is a good thing that OPEC still operates, speaks, holds meetings given the circumstances that some countries have experienced”, he was quoted as saying.
OPEC member nations did agree to appoint Nigeria’s Mohammed Barkindo as its new secretary-general.
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BMI Research oil and gas analyst Peter Lee told AFP that prices did not move drastically owing to cautiousness.
