Crude futures hit five-week highs for a second straight day on Tuesday as sources at OPEC spoke of Saudi Arabia’s apparent desire for higher oil prices while Russia met the producer group to discuss the market. Focus on production losses in Nigeria, where more than 700,000 barrels per day (bpd) have been lost to militant attacks and pipeline problems, also supported crude prices.
The Organization of the Petroleum Exporting Countries will probably revive talks on freezing oil output levels when it meets non-OPEC nations next month, OPEC sources told Reuters. Top exporter Saudi Arabia appears to want higher prices although Iran, Iraq and Russia present obstacles to a deal, the sources said. Russian energy officials discussed with their OPEC counterparts the situation on global oil markets and other questions affecting their mutual relationship at a meeting in Vienna, the Russian Energy Ministry said in a statement.
Another regular meeting in the Austrian capital between Russia and OPEC, a so-called “energy dialogue”, has been scheduled for October, Russian Energy Minister Alexander Novak said in the statement. “While it is tempting to dismiss the OPEC chatter as a non-factor intended to talk up prices, we are also resigning to a momentum shift in which our technical indicators are flashing green lights in favor of further crude price rallies of at least a couple of dollars a barrel,” said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Brent crude futures were up 63 cents, or 1.3 percent, at $48.98 a barrel by 12:15 p.m. EDT (1605). It rallied earlier to $49.08, a peak since July 9.
US West Texas Intermediate crude futures rose by 68 cents, or 1.5 percent, to $46.42 a barrel, after reaching $46.51, its highest since July 7.
Both crude benchmarks have gained about 11 per cent over the past four sessions after Saudi Energy Minister Khalid al-Falih said the kingdom would work with others to stabilise the market. . Most analysts are skeptical of such a deal.
Within OPEC too, there are doubts about the group’s ability to achieve cooperation amongst its members or with producers on the outside. A much-touted OPEC production freeze plan was scuttled in April by Saudi Arabia, which was more keen then in protecting its market share.
“Optimism on my part is quite sparse,” Emmanuel Ibe Kachikwu, the oil minister for Nigeria, an OPEC member, wrote on his Twitter account, referring to the possibility of a deal. He, however, added that “engagement with the 70 per cent (of) oil producers might have an impact”.