Crude oil extended a five-day winning streak today as signals from OPEC officials suggest that the oil production cut deal agreed last December could be extended further.
A ministerial reshuffle in Riyadh also helped: on Sunday King Salman appointed his son Abdulaziz the new energy minister of the country, ousting Khalid al-Falih, who had led the Saudi energy ministry since 2016. While the move could have caused anxiety in trading circles, pressuring prices, assurances that Abdulaziz bin Salman would stay on the current course with regard to production seemed to have appeased the market.
Brent crude hit a high of $63.10 yesterday before retreating somewhat today in Asian trade, and West Texas Intermediate peaked at $58.36 on Monday. At the time of writing, Brent was trading at $62.79 a barrel, with WTI at $58.08.
The American Petroleum Institute is reporting weekly oil inventory estimates today and if it is in its now habitual surprising mode it could push prices further up. Last week, the API reported an unexpected inventory build, which was rejected by the Energy Information Administration a day later but temporarily added pressure to prices.
OPEC and its partners are meeting on Thursday to discuss the next steps in the supply control deal. While many expect an extension to the cuts, some have gone further, expecting also additional cuts. That’s despite the fact that involuntary production slumps in Venezuela and Iran have failed to have any effect on prices while bringing OPEC’s compliance with the cuts well above 100 percent.
The main headwind for prices, however, remains. The U.S. and China are far from a trade deal despite positive signals from both sides about their willingness to settle their differences. Until this trade war finds a resolution, prices will have a pretty limited space for growth, whatever OPEC+ decides to do.
By Irina Slav for Oilprice.com
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