Published: Sun, June 05, 2016
Economy | By Melissa Porter

OPEC 'very satisfied' with oil market

Iran's oil minister, Bijan Zanganeh, told reporters prior to the Thursday meeting that a new OPEC-wide target that didn't also set limits on individual countries' output levels would have no meaning, the report said.

Data from the US Energy Information Administration on Thursday showed larger-than-expected drops in stocks of gasoline and distillates, pointing to strong consumption and exports. Brent's price still remained nearly double January lows, on track for its eighth weekly gain in nine weeks.

West Texas Intermediate, the USA benchmark that has soared nearly 90 per cent since its low for the year, was trading just above $49.

Also adding to the downward pressure was the first rise in months in the number of oil drilling rigs deployed in the United States, suggesting that the recent rebound in crude prices could lead to higher U.S. output.

At the OPEC meeting in Vienna on Thursday, cartel member states did not manage to agree on the policy changes and failed to establish a cap on oil production.

Answering a question on whether Riyadh would propose setting a collective output ceiling, he said: "We will do that when necessary‎".

"Since January 20, oil prices have nearly doubled from near $26 per barrel to nearly $50 per barrel, at the same time total OPEC production has increased by around 100,000 bpd, despite heavy outages in Nigeria", BMI Research said.

The price of crude oil broke the US$50 mark again yesterday and remained marginally above this level, despite the lack of resolutions during the meeting of the Organisation of Petroleum Exporting Countries (OPEC). "Leaving aside the crude draw, the demand numbers for US gasoline and diesel were a bit too large to ignore".

John Hall, an oil analyst with alfaenergy, said: "Now that there is a realisation that Opec will not be restricting output, traders are caught long with too much oil in a falling market and so once $50 had been reached, there was a general mood to sell off rapidly".

Saudi Arabia previously said it would join a production freeze deal if Iran agreed to curb output.

OPEC's meeting in Vienna has ended with officials from the 13-nation cartel, which produces one third of the world's oil, unable to agree on limiting supply.

Experts say OPEC has kept the oil flowing to squeeze competitors - particularly USA shale oil producers - and retain market share. They also made a decision to stick to a policy of unfettered production, with ministers united in their optimism that global oil markets are improving.

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