Oil price is grinding higher ahead of the OPEC meeting next week as Russia, Saudi Arabia, and Iraq have agreed to the extension of the deal till March 2018. WTI is currently trading at $51.5 per barrel and Brent at $2.8 per barrel premium.
Key factors at play in crude oil market –
- Saudi Arabia’s oil minister Khalid al-Falih and the Russian oil minister Alexander Novak agreed to the extension of the deal till march 2018. Iraq and Kuwait have supported the proposal.
- Rumors suggest more countries could join the initiative.
- The war of words between Saudi Arabia and Iran could weigh over the upcoming OPEC meeting.
- Iran’s oil ministry official announced that the country wants to expand production by 3 million barrels per day.
- OPEC and N-OPEC ministers set to meet in Vienna on 25th May to discuss the possible extension of the November deal.
- IEA warns that new reserve addition has declined to a seven-decade low.
- Saudi Arabia reducing prices for its Arab lights in Asia and in Europe.
- Saudi Arabia has lost market shares in Asia to Iran and Iraq thanks to the deal.
- Despite the strike in Syria, the US and Russia seems to be converging on the geopolitical front.
- April report shows that OPEC still remains in full compliance with the deal as a group but many members are yet to adhere to the agreed levels.
- US production rose from 8.428 million barrels in last July to 9.305 million barrels per day last week. This is the highest level of production since 2015. Payrolls are once again rising in the oil and gas sector according to ADP job numbers.
- The oil market is in contango, currently at $0.04 per barrel.
- API reported a draw of 1.5 million barrels of crude oil.
Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT. Trade idea –
- A call will be given after the meeting outcome.
