Oil futures climbed almost 2% on Wednesday, backed by a decline in US stocks, while Brent is down before the OPEC meeting, which may end with a leap in global production.
US oil reserves fell 5.9 million barrels last week, the biggest one-week drop since January.
Stocks of refined crude oil rose to 17.7 million barrels per day, the highest value in record at this time of year.
Oil’s volatility has climbed to its highest levels since February. The main reason for this is the meeting of OPEC, which will be held at the end of this week – Thursday and Friday in Vienna. The question that concerns all market participants is whether group members will maintain production restrictions that have raised black metal prices to $ 70 a barrel or there will be a change in the agreement that reduces daily production by 1.8 million barrels from the market for the past 18 months. Russia is pushing to return a million barrels a day to the markets. Saudi Arabia will most likely try to reduce the number to prevent prices from falling too much. But, not all OPEC members agree. Iran, Venezuela and Iraq are of the opinion that the current agreement is good and should be maintained. Gold prices lost more than 4% on Friday, as traders expect an increase in global supply.
Iran said it could compromise the forthcoming OPEC + meeting by supporting a slight increase in yield. However, experts are of the opinion that the forthcoming OPEC+ meeting will end with a disagreement between the individual members of the cartel as there is no unanimous opinion on the issue of the increase in yields. Saudi Arabia, along with Russia, Ecuador and Kuwait, are increasing the yield, while Iran Algeria and Venezuela are against. The three parties in question, which are an obstacle to an agreement, blame Donald Trump for raising prices by imposing a limit on their exports to the United States. It is logical for the three countries to chase a higher price given the limited exports to the world’s largest oil consumer.
Against the backdrop of a decline in US oil reserves, the price has stabilized, but is still under pressure. If on Friday OPEC+ members fail to reach an agreement, it is very likely that we will observe short-term upward impulses, then a sharp downturn, given that a large number of countries will undergo an increase in yield as a result of the race, who will offer a lower price and respectively, will realize more.
Trader Aleksandar Kumanov