Announcement of informal OPEC meeting pushes oil prices higher

Representatives of the OPEC countries will now hold an informal meeting next month on the sidelines of an International Energy Forum biennial conference in Algeria in late September. It will be a first meeting since the correspondents met in June. Renewed decline in energy prices has prompted the member nations to take up such a step.

After reaching as high as $52 per barrel in June, oil price has declined to reach around $40 per barrel on the concern over a supply glut in the market. The raw crude market is closer to balance compared to 2014, however, the fear is that the product market is out of balance and the inventories are at multi-decade high. Russian Energy minister Alexander Novak said that Russia is open to talks for an output freeze, however, according to him, conditions are yet not there that could lead to such a step. Due to Saudi Arabia and Iran’s oppositions, such a step has already failed earlier this year.

WTI has bounced back to $42 per barrel after reaching $39 per barrel, but we see a further downside to at least towards $35 per barrel area. Today both the global benchmarks are up more than 1.7 percent.