U.S. Oil Prices Slip a Bit Before OPEC Meeting

OPEC Races to Salvage Oil Deal After Iran and Saudi Clash

U.S. Oil Prices Slip a Bit Before OPEC Meeting

Bijan Zanganeh is in the Austrian capital Vienna ahead of a meeting with his counterparts on Friday.

USA oil prices managed to stage a bounce this week after a rapid decline last Friday saw WTI crumple into 63.36 after lifting steadily into 66.80 for most of the week; with the technical bounce over oil has resumed drifting lower, though today's lift sees crude challenging the key 65.00 handle once again, a level that has become familiar in recent weeks.

"OPEC is listening to consumers", Bob Dudley, the chief executive of BP Plc, said on the sidelines of the OPEC conference in Vienna. Iran does at least "understand the necessity to reduce cuts" and has agreed to discuss the matter, Oman's Oil Minister Mohammed Al Rumhy said earlier in the day.

Iran has said that OPEC should stick to the terms of the production cut agreement, which took effect at the start of 2017 and is scheduled to run through the end of 2018.

Benchmark U.S. crude hit its highest level in more than three years in May, but U.S. and global prices have eased since then in anticipation that OPEC will approve more drilling.

Oil demand has been rising faster than expected, pushing prices higher despite a big increase in US oil output.

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WTI briefly turned positive earlier in the session after energy information provider Genscape said crude inventories at the key Cushing, Oklahoma hub were expected to have dropped by 2.3 million barrels in the week since Tuesday, traders said, alleviating some concerns that surging US production would outstrip demand.

Adding an extra one million barrels per day to the market "sounds like a good target to work with", Saudi Energy Minister Khalid al-Falih said at a seminar organised by the Organization of Petroleum Exporting Countries (OPEC).

Volatility was the theme on Wednesday as bearish traders continue to support the notion that Saudi Arabia and Russian Federation would push for at least a 1 million barrel per day increase in production, while bullish investors priced in opposition to the increase by Iran, Iraq and Venezuela. That means the country has nothing to gain from a deal to raise OPEC output, unlike arch-rival Saudi Arabia. The paper agreement would see production increase by 1 million barrels a day to bring the group back to target.

Signalling that positions might be softening, Saudi's Falih acknowledged that "not every country can respond to an allocation of higher production" and said it was important to be "sensitive" to those concerns.

Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.

"Iraq is trying very hard to narrow the gap between the two blocs". Off-topic, inappropriate or insulting comments will be removed.

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