Oil prices stabilized on Thursday around 50 USD per barrel after the doubts about a possible deal to lower yields in OPEC outweigh to the market. The price of US light WTI crude oil grew by 0.12% to 49.24 USD per barrel, while the price of European Brent oil rose by 0.14% to 50.05 USD per barrel. However, the investors remain uncertain whether OPEC can implement prior agreement for contraction in oil production.
Saudi Arabia insist for the decrease and limit of oil production, which is expected to stabilize the oil price at higher level and was supported by Russia, which is not a member of OPEC, but the largest oil producer in the world. However, the second largest country in OPEC, Iraq, said that will not decrease oil production, arguing that need money to fight against Islamic state. Moreover, the authorities in Baghdad are trying to attract investors to increase production above current record 4.43 million barrels per day.
Yesterday, the Energy Information Administration (EIA) in USA announced that reserves in the country last week decreased by 553,000 barrels to 468.16 million barrels. The forecasts were for an increase of about 700,000 barrels, but the market participants were disappointed by the result. According to some analysts the decline in stocks is misleading, as the decrease of 553,000 barrels is concentrated in the west coast, which is isolated from the rest of the network, while the reserves in East Coast and Gulf Coast actually increased.
There are factors that prevent the price decrease. In Venezuela, which is a member of OPEC, anti-government protests are growing and this causes concern for the oil industry, putting oil traders under pressure from possible limits of production. In Asia, South Korea’s S-Oil said it expects demand from refineries to increase in the region, which is also generally encouraging oil prices.
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