Published: Tue, August 09, 2016
Economy | By Melissa Porter

Oil prices rise after OPEC members call for production freeze

Oil prices rise after OPEC members call for production freeze

Rebalancing the oil market has proved a long and frustrating process as oil-exporting countries hard hit by the 2014-15 price slump were themselves some of the fastest-growing oil consumers.

"If the market is rebalanced next year, you don't need a freeze", said Giovanni Staunovo, an analyst at UBS Group AG.

On April 17, representatives of 18 oil-producing nations met in Doha, Qatar to discuss freezing oil production cap, but failed to reach agreement.

Oddly enough, the Monday rally was largely attributed to the meeting announcement, which was the final sentence of a press release that detailed comments from the cartel's president, Mohammed bin Saleh al-Sada.

United States benchmark West Texas Intermediate for September delivery rallied Dollars 1.24 to USD 43.04 a barrel.

"OPEC members including Venezuela, Ecuador and Kuwait are said to be behind this latest reincarnation".

"Market participants have also become extremely bearish as can be seen in the recent [Commodity Futures Trading Commission Commitment of Traders] Report", he told MarketWatch.

Oil tumbled into a bear market last week, ending a recovery that saw prices nearly double from a 12-year low in February. The global benchmark traded at a premium of $1.71 to WTI for October.

Russian Federation sees no need for renewing discussion of an oil-output freeze at current crude prices, while leaving open the possibility for the future, Energy Minister Alexander Novak told journalists in Moscow Monday.

"These are more of an outcome resulting from weaker refinery margins, inventory overhang - particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil", he said.

IBD'S TAKE: U.S. crude's tumble below the key $40 per barrel support earlier this week has put shares of oil major Chevron further out of buy range and Royal Dutch Shell in sell range, even as crude rebounds somewhat.

Possible resumption of talks on the freezing of oil production among OPEC countries made the prices grow on August 8. WTI oil briefly topped $50 in June. Iran increased production after ruling out any ceiling on its output. Money managers increased wagers on declines in oil prices to a record on increasing US inventories and ahead of a seasonal refinery maintenance that will curb crude demand - futures have dipped in each of the past five Septembers, reports Mark Shenk for Bloomberg.

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