February 18, 2018

Oil Futures Fall For Second Session As Investors Await OPEC Decision

10 August 2017, 01:31 | Rufus Hill

Oil prices tug lower on doubts OPEC meeting will deliver

General view of Ha'er Prison in Saudi Arabia

Oil prices have gained marginally after reports of lower crude supplies from Saudi Arabia set to start next month negated the impact of the ongoing high output from prominent exporters, including the US.

An official familiar with the matter told Reuters that Saudi Arabian state oil company Aramco will decrease designated customer allocation next month by almost 520,000 barrels per day (bpd).

WTI oil for September delivery dropped 0.5% to settle at USD49.17/bbl, unable to hold the USD50 mark.

Brent crude, the global benchmark, rose 0.2% to $52.46 a barrel.

"Support is coming from a stabilising USA rig count, falling United States inventories and the Saudi cut in exports", Ole Hansen, head of commodity strategy at Denmark's Saxo Bank, told the Reuters Global Oil Forum. That declaration came as the Organization of the Petroleum Exporting Countries-of which Saudi Arabia is the most important member-has struggled to reduce the oversupply of oil in the global market that has weighed on prices for three years.

Libya was exempted from a push to cut global production and bolster oil prices led by the Organization of the Petroleum Exporting Countries (OPEC) and other big producers like Russian Federation. Supplies to Europe and the US will also be reduced, the sources said, according to the report. The issue has been particularly "a struggle for Iraq lately", said Saxo's Hansen.

Also expected to be high on the agenda is the possible inclusion of Libya in the output-cap effort.

"We continue to see stronger third-quarter seasonal demand as more than enough to offset recent production increases and still draw down inventories to at least some degree", said Tim Evans of Citi Futures. Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi on Monday and Tuesday to discuss ways to boost compliance with the deal to cut 1.8 million barrels per day in production. Nigeria, another OPEC member originally exempt from the pact, recently agree to begin reining in output.

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