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Oil Prices Slip Ahead of Key OPEC Decision

OPEC oil ministers met on Thursday so far without any policy-making, but today they continue discussing the key issue whether to cut deeper oil supplies or not. Crude rates are trading ambiguously, showing mixed results at both positive and negative direction.

oil prices tumblePhoto: Foter

The OPEC Joint Ministerial Monitoring Committee (JMMC)  unexpectedly recommended on Thursday an increase in production cuts up to 500 thousand barrels per day to touch 1.7 million, whereas markets were expected a more modest cut. One can presuppose that OPEC would support the supply cut, but without a decision yet over the distribution of this additional amount of reduction.

The main burden to reduce production, obviously, will fall on Saudi Arabia. Recall, Riyadh announced that the country would keep its oil production at about 400 thousand barrels per day less till the end of the year exceeding the required extent according to OPEC agreement. But the Saudi authorities called on other OPEC members to fully fulfill their obligations (in particular, Iraq and Nigeria), which would reduce supply the overall supply by another 400-500,000.

The international rating agency Fitch Ratings lowered forecasts for Brent and WTI oil prices for 2019, confirming forecasts for 2020 and 2021.  In accordance with the average prices the Brent benchmark will be $63.44 per barrel in 2019, rather than $65, as it was previously expected. As for the forecast for U.S. WTI, it was revised from prior $57.5 to $56.83 per barrel.

Brent futures with delivery in February slipped by 0.19 percent, to $63.26 per barrel at 8.49 GMT, U.S. light oil futures with delivery in January lost 0.22 percent, to $58,30 per barrel.