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Oil prices declined on Friday, as investors remained cautious ahead of the Organization of the Petroleum Exporting Countries’ (OPEC) meeting in Vienna next week.  

US West Texas Intermediate (WTI) oil futures for the July contract was down by 1.4 percent to $65.91 per barrel, while international benchmark Brent crude futures for the August delivery declined by 1.8 percent to $74.52 per barrel.

Movements came as crude prices were weighed down by the prospect of OPEC unwinding production cuts, as it faces potential supply drawback from Venezuela and a possible oil export drop in Iran, as the US sanctions drew closer.

Both contracts reached 3-1/2 year highs in May, but have since went down due to high US crude output and as the OPEC, non-OPEC member Russia, and its other allies appeared to be set to hike production in their meeting in Vienna on June 22.

That left investors wary on taking large new positions, expecting oil markets to continue experiencing limited movement ahead of the crucial meeting.  

Saudi Arabia and Russia Indicate Higher Oil Supply

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Saudi Arabia and Russia indicated the increase in output on Thursday, with Russian Energy Minister Alexander Novak stating that he had talked with Saudi Energy Minister Khalid Al-Falih in Moscow and that both nations in principle agreed to gradually ease production cuts.

Novak said they in general, support the move, but the specifics will have to be discuss with the ministers in a week, adding that one possible approach would involve gradually raising output by 1.5 million bpd, starting July 1. Several analysts forecast a rise in production to be agreed.

The OPEC deal, which started in January 2017, required 1.8 million barrels per day (bpd) reduction from global output to tackle supply glut and improve prices. The agreement is set to expire by the end of 2018.

However, seeing oil prices hitting multi-year highs lately could mean that OPEC is now ready to soften its hold on production, and markets are preparing for the negative effects that may come.

Recent monthly data released revealed that the total production of OPEC countries gained 35,000 bpd in May to 31.87 million bpd.

The decision whether the OPEC will raise output by 1 million bpd or not will be established during the meeting in Vienna on June 22.  

Besides the looming OPEC meeting, traders are also awaiting weekly Baker Hughes oil rig count for any indications of growing US oil supply.

Data from the Energy Information Administration (EIA) showed that US oil inventories fell by 4.143 million barrels for the week ended June 8, beating forecasts of 1.440 million barrels.

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