Organisation of the Petroleum Exporting Countries (OPEC) headquarters. Photo/Courtesy
UPI– Anticipation building over a weekend meeting between OPEC members and other producers helped lift oil prices in early trading Friday, though doubts remain.
Crude oil prices dropped off sharply at the start of the week, but rallied during the last two sessions as volatility builds ahead of a weekend producer’s meeting in Vienna. Crude oil prices moved erratically, but in positive territory, Thursday as industry data showed some level of balance between supply and demand was emerging.
Organisation of the Petroleum Exporting Countries (OPEC) and non-members will meet in Vienna to discuss a deal reached last week to hold output at 32.5 million barrels per day starting in January. The production arrangement depends in part on cooperation from countries like Russia, which has offered mixed support for the deal.
Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said Russian President Vladimir Putin could be the swing factor moving into the weekend.
“It is likely that the state of Russia will be able to persuade Russian oil companies to ‘voluntarily’ do something to make supply cut cooperation with OPEC as visible as possible,” he said in an emailed statement. “It is difficult to see Russia now walking out as a Russian participation will provide additional geopolitical leverage for the Kremlin.”
Traders took the cue and pushed oil prices higher heading into the weekend. The price for Brent, now in the February contract, was swinging wildly overnight, but settled in to open up 0.6 percent to start the day at $54.21 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was up 1.3 percent to open trading in New York at $51.45 per barrel.
Jakob said much of the optimism will be tested during the weekend. So far, most OPEC members are producing more than allotted under the terms of the Vienna agreement and Russia is producing at or near post-Soviet highs.
Oil prices will be influenced later in the day when oilfield services company Baker Hughes publishes weekly data on exploration and production. The company’s rig counts serve as a loose barometer for an appetite for spending in the current market climate. A higher rig count could indicate higher production later, and undermine the emerging sentiment for balance.
The U.S. Energy Information Administration said this week U.S. oil production was on pace to decline, but not as much as previously expected.