Oil rises, gains capped by oversupply concerns
Organization of the Petroleum Exporting Countries, Russia and other producers meet in Vienna this week to discuss a potential cut in production, although it faces pressure from U.S. President Donald Trump not to reduce output.
“Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” Trump wrote on Twitter on Wednesday.
OPEC is keen to avert the kind of build-up in global oil inventories that sent prices tumbling for more than a year and a half from late 2014. At the start of 2016, benchmark Brent was trading below $30 a barrel.
Brent crude futures LCOc1 were last up 16 cents on the day at $62.24 a barrel by 1500 GMT, but above a session low of $60.80, while U.S. futures CLc1 were up 19 cents at $53.44.
Brent is still well below a peak in October above $86.
“Oil sentiment is very fragile given clear event risk at play,” Harry Tchilinguirian, head of commodity strategy at BNP Paribas told the Reuters Global Oil Forum.
“The optimism that emerged following the G20 summit with some progress in U.S./China trade relations and the announcements of producer cooperation ... gave way very quickly.”
Saudi Arabia produced a record 11.3 million barrels per day (bpd) of crude in November, according to a source familiar with the matter.
That marks a rise from October’s 10.65 million bpd, which, if confirmed, would mark the second-largest monthly increase since Reuters records began in 1997. PRODN-SA
“OPEC’s will-they-or-won’t-they antics are keeping market players on the edge of their seats,” PVM Oil Associates said in a note. “There is a general consensus that the Saudis will have their work cut out to get Russia to significantly trim supply.”
An eleventh consecutive weekly build in U.S. crude inventories, the world’s largest, has added to pressure on the prices.
Official U.S. government oil production and inventory data is due later on Thursday, delayed by one day. A Reuters survey forecast a decline of 900,000 barrels. – Reuters