Oil Price on Holding Pattern Ahead of OPEC meeting

Saudi Arabia’s energy minister may face his toughest test when OPEC members meet. Bloomberg’s Heesu Lee reports

After losing around four percent last week, oil plunged again Monday as investors fret over Russian Federation and Saudi Arabia's expected move to ramp up output at an OPEC meeting that starts Friday.

There is a risk that traders are expecting a little bit too much heading into the meeting and could reshuffle their positions upon speculation that OPEC will not increase production to the amount now being priced in by the market between 500,000 to 1 million barrels a day.

But it's Iran and Venezuela-founding OPEC members and those most affected by USA sanctions and unable to boost production-that are most vehemently opposing an increase in the cartel's production.

US President Donald Trump said in a statement on Wednesday the Organization of Petroleum Exporting Countries (OPEC) is to blame for high oil prices.

"OPEC is fractured or fracturing", McKenna said, as Iran, Venezuela, and Iraq "seek to veto the production increase". But U.S. production has not reached the maximum rates in the past year and in the first half of this year.

"The OPEC countries are going to meet in Vienna". The two countries produce around a fifth of world output.

Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) Chairman Mukesh K. Surana also said fuel prices may be lowered post the upcoming OPEC meeting.

More news: Iran scratches out World Cup victory against Morocco with own goal

As recently as April, Saudi Energy Minister Khaled al-Faleh had voiced support for the oil cut deal, saying the market had the capacity to absorb higher prices.

That was still down $1.23, or 1.9 percent, from their last settlement.

OPEC is up for a tough meeting in Vienna this week after the leaders of the two groups of the OPEC/NOPEC production cuts-Saudi Arabia and Russia-have signaled that they are willing to boost production to offset what is sure to be further supply disruptions, mostly from Venezuela's collapsing oil industry and from a potential decline in Iran's oil exports in view of the returning USA sanctions. China said it would impose tarrifs on a variety of USA goods, including crude and gasoline, in response to President Donald Trump's $50 billion levy on Chinese imports. "This recalls the June 2011 meeting, when OPEC was unable to agree on an increase in production to compensate for the outages.in Libya", Fritsch said. While Riyadh and Moscow have agreed to open the taps, Iran and Venezuela want to maintain current policy.

This suggests that there has been a rebalancing after years of an overwhelming oversupply of the commodity; equally, it could also point to underlying concerns that have been evident for some time, that some members no longer wish to comply with OPEC's production cut deal.

Tankers waiting to load more than 24 million barrels of crude, nearly as much as state producer PDVSA shipped in April, are sitting off the Opec member's main oil port.

WTI turned positive after energy information provider Genscape said crude inventories at the Cushing, Oklahoma hub were expected to have dropped by 2.3 million barrels in the week since Tuesday, traders said. After yearlong rise in oil and gasoline price, there's a call to control Oil price from rising too far and too fast.

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