The big OPEC meeting is about to start and already comments from OPEC leaders is impacting crude oil prices. Yet it might be a warning from the OECD that may actually have more influence on the oil trade today.
Having momentarily surpassed the $50 oer barrel hurdle, Brent and WTI suffered from profit-taking in the second half of Thursday’s session before extending their losses slightly on Friday morning. Despite the pullback, both oil contracts still looked set to close higher for the third straight week.
A larger than expected crude oil draw reported in the API weekly inventory snapshot firmed prices ahead of this morning’s more widely followed EIA oil fundamental report. Both the spot WTI and Brent contracts are trading above the $49 per barrel level and are higher for the week after a modest round of selling to start the trading week on Monday.
OPEC's thorniest dilemma of the past year - at least from a purely oil standpoint - is about to disappear. Less than six months after the lifting of Western sanctions, Iran is close to regaining normal oil export volumes, adding extra barrels to the market in an unexpectedly smooth way and helped by supply disruptions from Canada to Nigeria.
Reverberations from the oil price crash continue as more bankruptcies and increased geo-political tensions are causing a seismic shift in the long term outlook for energy production. With mounting pressure on oil-producing countries leading to civil unrest and more bankruptcies of highly leveraged oil companies, the bottom of the commodity cycle is well underway. The dominoes are falling and prices are rising.
Oil prices jumped over 2% on Monday to their highest since November 2015 on growing Nigerian oil output disruptions and after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit.
OPEC said the global oil market is oversupplied and signaled the glut may increase this year, as surging output from its members makes up for losses from other countries whose production has been hit by a price fall.