News / Economy

Oil Prices Rise Before OPEC Meeting

The Organization of the Petroleum Exporting Countries (OPEC) logo is pictured at its headquarters in Vienna, June 10, 2014.
The Organization of the Petroleum Exporting Countries (OPEC) logo is pictured at its headquarters in Vienna, June 10, 2014.
VOA News
Oil prices rising Tuesday to near $105 a barrel leaves smiling OPEC ministers with an easy task to leave crude output levels as they are at their Wednesday meeting.
 
Brent North Sea crude has stayed above that price, the preferred level of top OPEC producer Saudi Arabia, all year and was trading near $110 on Tuesday, supported by the almost total loss of supplies from OPEC member Libya.
 
The Organization of the Petroleum Exporting Countries, whose dozen member nations pump more than a third of the world's oil, is meeting in Vienna to agree on policy for the second half of the year.

Ministers have said they will leave the output target of 30 million barrels per day (bpd) unchanged, and that the market is well-supplied.
 
“The price is good. Brent is $110, it is not bad,” said Angolan Oil Minister Jose de Vasconcelos.
 
Saudi Arabia's Oil Minister Ali al-Naimi had yet to arrive in Vienna, but gave his unambiguous view on the meeting last month.
 
“There is no reason for a change. Absolutely no reason,” he told reporters in Seoul.
 
“Supply is highly sufficient, demand is great and the market is fairly stable.”

US supplies

Meanwhile, U.S. crude supplies are seen falling, the AP reported.

Data for the week ending June 6 is expected to show draws of 1.2 million barrels in crude oil stocks of 500,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration - the market benchmark - will be out on Wednesday.
 
Riyadh kept production little changed in May, pumping 9.705 million barrels per day, according to industry sources, supporting Naimi's view that the market did not need more.
 
OPEC has steered a course around the loss of over a million barrels per day of oil from Libya, as the crisis there deepened to its worst since the civil war three years ago.
 
Oil Minister Omar Shakmak said on his arrival in Vienna that output had fallen below 200,000 bpd, a fraction of Libya's 1.6 million bpd before the conflict.
 
He at least welcomed the oil price.
 
“This is positive for the market, it's for the benefit of producers and customers alike,” Shakmak said.
 
Prices "elevated"

The IEA in its May report said oil prices remained “elevated” and market balances called for a “significant rise” in OPEC production from current levels for the second half of the year.

As well as unrest in Libya, western sanctions on Iran have also cut OPEC supplies, but output recovered in May close to the 30 million bpd target as extra barrels from Iraq and Angola helped offset the unplanned reductions.
 
“With the current low price volatility, OPEC has no incentive to change anything when it also has to deal with the uncertainty of Libya and Iran,” said Olivier Jakob, oil analyst at Petromatrix.

Also, there are worries of potential supply strains as Ukraine risks sliding into all-out civil war, the French news agency AFP reported, noting that investors are concerned that a full-blown conflict in Ukraine would disrupt supplies and send energy prices soaring.

Some information for this report provided by Reuters, AFP and AP.

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