Following a sharp increase in crude prices from their sub-$30 per barrel lows in 2016, the group on 22 June will meet in Vienna to discuss forward policy.
An OPEC technical panel has found that global oil demand is on pace to stay strong in the second half of this year, suggesting that the oil market could comfortably absorb a production increase without sending oil prices plummeting, Reuters reported on Tuesday, citing three OPEC sources.
The two countries are threatening punitive tariffs on each other's exports, which could include oil.
Russian Federation and Saudi Arabia have agreed to extend their oil partnership indefinitely, with the agreement stipulating that they could move to regulate oil production at any moment, TASS reports, quoting Energy Minister Alexander Novak. "Now all countries want to extract more oil and the price of each barrel nearly costs twice as much as on the day of signing the agreement", he explained. That could keep a cap on prices and limit how much money Opec makes at higher production levels.
Even though the 2019 oil price forecast is higher than it was in the May monthly report, EIA expects oil prices to decline in the coming months because global oil inventories are expected to rise slightly during the second half of 2018 and in 2019.According to EIA, expected inventory growth results from forecast oil supply growth outpacing forecast oil demand growth in 2019.
The market traded higher on expectations that the production increases could be less than the full 1.5 million bpd, at 300,000 to 600,000 bpd, said Gene McGillian, director of market research at Tradition Energy in Stamford.
"There are other countries that do not want to reduce the cuts". Although the market probably won't revisit the huge price swings from yesteryear because the USA is now such a big producer, Thummel said, it's still a possibility.
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Whether they can convince those producers whose output is falling to accept an outcome where prices are lower than they might otherwise have been could have implications for not just near-term oil prices but the stability and effectiveness of OPEC in future.
The NYMEX July crude contract was also under pressure from a rising United States rig count, which rose by one for the week that ended June 15 to 863, oilfield service provider Baker Hughes said Friday in its weekly report.
In the run-up to meetings of Opec and its allies in Vienna this week, several nations have floated plans for production increases, but no consensus has emerged for what is likely to be a fractious meeting.
Chinese tariffs on United States energy exports would affect roughly one of every four barrels of oil the U.S. now ships to overseas refiners and, if ultimately imposed, would spark a significant shift in global crude flows, analysts said Monday. Saudi Arabia's own data for May showed it increased its own output by 161,400 barrels a day.
USA crude's discount to Brent WTCLc1-LCOc1 widened to as much as $9.75 a barrel, after narrowing on Friday.
Flynn said the markets really aren't ready for the potential impact of geopolitical threats or outright output disruption.