Oil Pauses Ahead of OPEC Meeting
May 24 2017 - 08:12AM
Dow Jones News
By Jon Sindreu and Biman Mukherji
Oil prices were little changed Wednesday, after five straight
days of gains on the back of expectations that major producers will
announce output cuts on Thursday.
Brent crude, the global benchmark, gained 0.2% to $54.26 a
barrel. West Texas Intermediate for June delivery, meanwhile,
traded flat at $51.47 a barrel on the New York Mercantile Exchange.
If it closes at these levels, it would put an end to five straight
days of gains, the longest winning streak since early April.
Oil has been on a roller-coaster ride since March, torn between
concerns about mounting stockpiles and greater optimism regarding
global demand. It has gained roughly 5% this month, buoyed by
reports that Saudi Arabia is garnering support within the
Organization of the Petroleum Exporting Countries for a potential
nine-month extension of ongoing production cuts.
The American Petroleum Institute, a private industry group, said
late Tuesday that crude and gasoline stockpiles in the U.S.
declined last week. Drops are also anticipated to be seen in later
Wednesday's government report.
According to Stephen Brennock, analyst at London-based brokerage
PVM, the world's major oil producers "are almost guaranteed to
extend production curbs" at Thursday's OPEC meeting in Vienna,
after oil ministers from Saudi Arabia and Algeria expressed
confidence that a deal would be struck.
If confirmed, "we will see a bounce in the market very quickly,"
said OM Financial's Stuart Ive, as "there are plenty of reasons to
think that demand will be increasing." He thinks oil could get
toward $65 by year's end provided there is compliance by all
participants to the output cuts.
Members of the cartel want global inventories to fall back to
their five-year average, analysts say, in order to ease fears about
an oversupply in the market. In the long term, however, traders
remain concerned that U.S. shale producers can ramp up production
to offset any cuts by OPEC.
"The ability of the U.S. shale sector to revive itself,
restructure at a corporate level, and bring back on tap incremental
oil production is a deep challenge to OPEC's oil price policy,"
said Nizam Hamid, head of strategy in Europe at WisdomTree
Investments, Inc.
Meanwhile, Nymex June gasoline futures were mostly flat at
$1.6661 a gallon and ICE gas oil rose 0.3% to $480.25 per metric
ton. Diesel, which through Tuesday had gained 10-straight sessions
for the first time since New Year's 2010, added 0.4% to $1.6177 a
gallon.
Write to Jon Sindreu at jon.sindreu@wsj.com and Biman Mukherji
at biman.mukherji@wsj.com
(END) Dow Jones Newswires
May 24, 2017 07:57 ET (11:57 GMT)
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