Opec giants plan super group to stabilise oil market

Feb 21, 2018, 06:33
Opec giants plan super group to stabilise oil market

Oil prices hit their highest level in almost two weeks today, lifted by a global equity market recovery and tensions in the Middle East, although concerns of rising USA production tempered gains.

US West Texas Intermediate crude for March delivery was up 46 cents at US$62.14 a barrel, after earlier gaining as much as 1.4 per cent to its highest since February 7.

A weaker greenback potentially supports consumption of dollar-denominated commodities as it makes fuel and raw materials cheaper for countries using other currencies. The outlook for USA oil production in both 2018 and 2019 is "phenomenal", Deputy Energy Secretary Dan Brouillette said in an interview in London.

Brent crude futures were at $65.48 per barrel, down 19 cents, or 0.3 percent, from their last close.

The "market rebalancing has gained massive momentum" as the Organization of Petroleum Exporting Countries and its partners work to trim output, OPEC Secretary-General Mohammad Barkindo said Monday in Nigeria. Europe's main indexes were fairly stable on Tuesday but Asian markets closed broadly lower, with the Nikkei 225 closing down 1 percent, South Korea's Kospi falling 1.13 percent and the Shanghai Composite slumping 0.46 percent.

On similar lines, the oil for delivery in March contract traded lower by Rs 2.30, or 0.39 per cent, to Rs 585.60 per 10 kgs in 204 lots.

Oil is struggling to regain the highs of January after a sell-off in global equities seeped into crude markets earlier this month.

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However, since the data was compiled, Brent crude has risen almost 5%, and Tuesday's drop looked more technical rather than based on supply and demand fundamentals.

"(Brent's) premium has been narrowing.

Oil prices fell on Wednesday, weighed down as the United States dollar moved further away from three-year lows hit last week.

Overall, oil markets remain supported by supply restraint on the part of OPEC, which started a year ago to draw down excess global inventories.

Barkindo said compliance a year ago stood at 107%.

Commercial oil stocks for the OECD rose in January 2018 and were about 74 million barrels over the latest five-year average, he said.