WTI Oil Putting Up A Respectable Fight on OPEC

WTI Oil Putting Up A Respectable Fight on OPEC

WTI Oil Putting Up A Respectable Fight on OPEC

The OPEC oil ministers began arriving in Vienna on Tuesday ahead of their official meeting Friday, when they will also confer with Russian Federation, a non-OPEC country that since late 2016 has cooperated with the cartel to limit production.

Ultimately, Hewson says, the 14 countries in the Organization of the Petroleum Exporting Countries are likely to agree on a production increase.

Iran's comments show that OPEC members are set to clash when they meet later this week in Vienna to discuss the proposal to end global output cuts. The global economy is stronger, fossil-fuel energy demand is at a record high, and the nuclear deal that allowed Iran, an Opec member, to start selling oil again is in tatters.

The increase of 300,000 to 600,000 barrels a day - above the current OPEC+ production of about 32 million barrels a day - is a less theoretical number.

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China on Saturday threatened an additional 25% tariff on $50 billion worth of United States goods, including energy and agricultural products, in response to President Donald Trump's decision to place similar tariffs on the same annual value of Chinese product imports.

"Clearly investors have already priced in some easing on the production limits that OPEC has had in place now for some time", said Peter Kenny, senior market strategist at Global Markets Advisory Group, in NY.

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Venezuela's state oil company Petroleos de Venezuela has seen its operations mired by problems ranging from fast-declining crude production and poor refining due to a lack of equipment, to obstacles for exporting oil amid port congestion and financial sanctions.

Adding to the tensions, Iran and Venezuela continued to insist that OPEC on Friday debate US sanctions against the two countries, but the organisation's secretariat has rejected their requests, according to letters seen by Reuters.

"Every decision in OPEC needs the unanimity and I don't believe in this meeting we can reach agreement", he said, adding the issue "has been politicized by President Trump".

China's aggressive riposte to Trump took some in the industry by surprise. So as Iran cuts back by 500,000 barrels a day, something like that, Saudi is talking about filling that gap there. The compliance with agreed cuts has reached 172 per cent and any reduction will translate into drop of 3.1 mb/d.

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.

But Goldman Sachs analysts said in a Monday note that despite an expected increase in OPEC output, weaker emerging market demand and a burgeoning trade war between the U.S. and China, the oil market remains in deficit. We expect prices to be in broad range of $63 and $66 on the WTI, with heightened volatility ahead of the event.

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