Oil steady ahead of Opec meeting

OPEC headquarters, Vienna, Austria.

OPEC headquarters, Vienna, Austria.

06 June 2015 – Oil markets moved sideways in cautious trading early on Friday ahead of an Opec decision likely to keep the market oversupplied and setting aside warnings of a second lurch lower in prices as some members like Iraq and Iran look to ramp up exports.
Front-month Brent futures were trading at $62.08 per barrel in early trade on Friday, five cents above its previous settlement, while US crude futures dipped 5 cents to $57.95.

By agreeing to maintain its existing output ceiling, Opec would continue to support the world’s top exporter Saudi Arabia, which last year said it would not cut production to keep prices high, triggering the biggest price fall since the financial crisis of 2008.

With oil prices having rebounded by more than a third after hitting a six-year low of $45 a barrel in January, officials meeting in Vienna see little reason to tinker with a strategy that seems to have resurrected moribund growth in world oil consumption and put a damper on the US shale boom.

Still, traders said market participants were reluctant to take on big new positions ahead of a final decision as surprise outcomes from the Opec meeting could have potentially huge impacts on prices. Prices tumbled 3% in the previous two sessions as markets expected oversupply to continue.

“Prices came under pressure as Iraq … exports are now expected to rise approximately 5% in June as various fields boost output,” ANZ said on Friday.

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