Crude oil prices were mixed in European trading Thursday morning as the market searched for signals on how OPEC will resolve rising divisions over the future of the production cut agreement, and digested a surprise drop in US crude stocks.
At 1030 GMT, the August ICE Brent crude futures contract was down 31 cents/b from Wednesday’s settle, at $76.43/b, while the NYMEX July sweet light crude contract was up 16 cents at $66.80/b. The US dollar index was down 0.27%.
On Thursday morning, mixed comments from OPEC members cast further uncertainty over whether OPEC would maintain current production cuts or increase output over the course of the year, ahead of the June 22 OPEC meeting in Vienna.
On Thursday, Saudi energy minister Khalid al-Falih told reporters in Moscow that an agreement between OPEC and non-OPEC partners to increase output and loosen quotas was « inevitable. »
« I think it will be a reasonable, moderate agreement. It’s not going to be anything outlandish. We will be easing our ceilings back, » the minister said.
That sentiment is backed by Russia, which has also communicated that it hopes to increase output following next week’s meeting.
But Iranian minister Hossein Kazempour Ardebili said Thursday that Iran, Iraq and Venezuela are aligned in maintaining the current OPEC deal, and said that current prices are acceptable to consumers and producers.
The increasingly public split between the members of the production cut agreement, in place since January 2017, comes on the tail of monthly reports from OPEC, the International Energy Agency and the US Energy Information Administration.
Those reports collectively painted a picture of sharply falling output from Venezuela and Iran, due to the reinstatement of sanctions on Iran and economic chaos in Venezuela, which has increased the case for raising output in order to avoid sudden price spikes, while also largely predicting that US shale output would continue to grow at a frenetic pace.
Meanwhile, the market was also weighing a surprise drop in US crude stocks figures, which is typically bullish for the market.
Crude stocks fell by 4.143 million barrels to 432.441 million barrels for the week ended June 8, according to weekly numbers from the EIA. Gasoline and distillate stocks fell by 2.271 million barrels and 2.101 million barrels respectively.
Those figures exceeded forecasts made by analysts surveyed by S&P Global Platts, but contradicted numbers released on Tuesday by the American Petroleum Institute, which said that crude stocks actually rose in that week, by 883,000 barrels.
Analysts had forecast crude stocks would decline by 2.6 million barrels for that week, with gasoline stocks expected to increase by 200,000 barrels respectively.
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