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Published: Sat, May 27, 2017
Economy | By Melissa Porter

Malaysia pledges to cut oil production by 20000 barrels per day

Malaysia pledges to cut oil production by 20000 barrels per day

Thursday's decision by the Organization of the Petroleum Exporting Countries - now at 14 members with the entry of Equatorial Guinea - and 10 other countries led by Russian Federation, means that the reductions of 1.8 million barrels a day agreed on in November will stay in place until March.

Overnight on Wall Street, the S&P 500 and the Nasdaq closed at record highs after strong earnings reports from retailers. And that meant WTI crude oil prices were volatile this spring.

The price of oil slumped $1.03 a barrel to $50.33 in NY trading Thursday, seemingly on the realization among investors that the extension is unlikely to substantially boost prices in the longer term. "As OPEC cuts and if US inventories decline to low levels, oil prices may increase, so China may use their own reserves or shop around rather than purchase oil at a higher price, capping the high end of the price range".

CFTC data showed that in the week ahead of the OPEC meeting, hedge funds raised bullish bets on US crude for the first time in five weeks.

LONDON (AP) - Oil prices were volatile but trading sharply lower Thursday ahead of an expected announcement from the OPEC oil cartel that it will extend recent production cuts for a further nine months. Spot gold rose 0.5 percent to $1,261 an ounce, poised for a 0.5 percent gain for the week.

"The U.S. shale producer does what everyone thought was impossible".

"It is a disappointment that OPEC hasn't done more to balance the markets", he added.

ASIA'S DAY: The Nikkei 225 stock index in Tokyo climbed 0.4 percent to close at 19,813.13 and Hong Kong's Hang Seng rallied 0.8 percent to 25,630.78. Australia's Woodside Petroleum fell 2.3 percent and PetroChina lost 1.5 percent.

The price for Brent crude oil was up a fraction of a percent in the moments before the start of the trading day in NY to $51.50 per barrel.

"There seems to be a little resistance on the price at $55/bbl, but if OPEC members and a selection of non-OPEC members, notably Russian Federation, abide by the supply cut, the price could conceivably hit $60/bbl by year-end".

"Prices today and in the near term are absolutely crucial for the economic stability of many oil producing nations, not just OPEC".

Although there was increased confidence in the supply/demand equation for oil given the potential for a net deficit over the second half of 2017, prices remained on the defensive as short-term position liquidation dominated.

The euro retreated nearly 0.1 per cent to $1.1202.

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