Venezuela’s Oil Minister, Eulogio Del Pino, has contacted the cartel’s Secretary-General, Mohamed Barkindo, to propose a discussion on coordinating output, the country’s president, Nicolás Maduro, said last week according to state news agency Agencia Venezuela de Noticias. Despite these positive signals, crude oil prices are still under pressure due to oversupply and speculations about renewed domestic production amid the high oil rig count.
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An expected return of economic growth in oil-consuming countries would rekindle demand for oil in the remainder of the year while oil supply would tighten, leading to higher prices. Meanwhile, price of September futures of WTI oil increased by 1.17 percent to $42.29 per barrel.
Many market participants have also cited the spike in the number of short net positions since June as having the potential to drive prices higher until the end of August.
Brent futures were trading at $44.47 per barrel, up 20 cents, or 0.5 percent. But just like previous endeavours, it seems doomed to fail, given key OPEC members (think: “Saudi Arabia, Iraq, and Iran) persist in their battle for market share, ramping up exports apace”, said Matt Smith of ClipperData in a note.
Members of OPEC have no specific plans to renew the failed April agreement with non-members to freeze oil production, two delegates from the group said Friday, asking not to be identified because the information isn’t public.
The price rise came on the back of renewed calls by some OPEC members to freeze production in a bid to rein in output that has been consistently outpacing demand, a demand that non-OPEC oil producing giant Russian Federation was quick to dismiss.
London-traded Brent futures are down nearly 15% since peaking at $52.80 in early June, as prospects of increased exports from Middle Eastern and North African producers, such as Iraq, Nigeria and Libya, added to concerns that a glut of oil products will cut demand for crude by refiners.
Several OPEC members want to revive the idea of setting new limits on oil production this autumn as Iran regains much of the energy-industry might it lost during the years of Western sanctions, The Wall Street Journal reported last week. This means oil will be sold at a higher price and then bought back later for a lower price, with the trader keeping the difference.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery inched up 10 cents, or 0.24%, to trade at $45.49 a barrel.
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The last time this happened was earlier in the year and it played a huge role in oil’s recovery from sub-$30 to over $50 a barrel.
