Oil prices down more than 4.5 pct in 2 days

Marco Green
May 27, 2018

In 2016, OPEC and several oil producing countries outside the cartel agreed to cut oil production by a total of 1.8 million barrels per day in an effort to stabilize global oil prices.

The ministers, along with their counterpart from the United Arab Emirates, discussed an output increase of about 1 million barrels per day, sources told Reuters. Brent Crude fell to $76.43 per barrel and WTI Crude to $68.03 around 1545 GMT. The rally has sparked worries that demand may falter, and the Organization of Petroleum Exporting Countries and its allies appear to be reacting to that idea with the first offer to boost output since January 2017.

Opec began a discussion about easing production cuts following a critical tweet from Trump, Opec's Secretary-General Mohammad Barkindo said.

"Higher prices have begun to impact forward demand expectations and OPEC and Russian Federation, being willing and able to increase production, may have been looking for a way out of the deal which would not upset the market too much", he said.

The energy ministers said any easing of the production freeze, which marked the first time in decades that Russian Federation had worked with the oil cartel to limit production, would be gradual and occur in the second half of the year.

Separately on Friday, Francisco Blanch and his team at BofA Merrill Lynch Global Research noted that prompt Brent crude oil prices hit their 2Q2018 target of $80/bbl.

Iran's light crude oil price rose $2.81 in the week ended on May 18, to register the greatest increase among crude benchmarks. "That possibility is top of the mind for traders and as a result oil prices are slipping.", he said.

Saudi Energy Minister Khalid al-Falih attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia May 25, 2018. Whatever is above that can lead to certain problems for consumers, which also isn't good for producers."OPEC and its allies will gather in Vienna for a policy meeting on June 22 to hammer out a deal". Without compensating supply from other members, this number looks likely to expand as the U.S.re-imposes sanctions on Iran and the collapse of Venezuela's oil industry worsens. In October 2016, Russia's oil output reached a 30-year high of 11.247 million bpd. Falih, the de facto head of OPEC, warned that consumer anxiety "is a concern to us".

Have a terrific Memorial Day weekend.

The committee "acknowledged the rising concerns expressed by some importing and consuming countries regarding potential shortages in the global oil market", and requested that OPEC "continue to closely monitor the oil market and to report any fundamental changes", it said in a statement.

Other reports by Click Lancashire

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