OPEC Doesn't Want Brent Over $60 a Barrel, Says Iran's Oil Minister

Jan 10, 2018, 00:28
OPEC Doesn't Want Brent Over $60 a Barrel, Says Iran's Oil Minister

The Organization of the Petroleum Exporting Countries and allies including Russian Federation are keeping supply limits in place in 2018, a second year of restraint, to reduce a price-denting glut of oil held in inventories.

OPEC has no formal target for oil prices.

Oil in NY has traded above $60 a barrel and the worldwide benchmark Brent has held above $66 since December as the Organization of Petroleum Exporting Countries (Opec) and allied suppliers capped output.

OPEC officials also think the 2018 rally has been mainly driven by unrest in Iran, rather than a tighter balance between supply and demand, giving rise to concern it may not last.

This week's supply reports from the American Petroleum Institute and the USA government's Energy Information Administration are predicted to reveal that us crude stocks dropped by 4.1 million barrels, an eighth week of decline.

The industry-funded American Petroleum Institute is scheduled to release its stockpiles data on Tuesday.

"The fact that the crude benchmarks are establishing highest levels since spring of 2015 on very little fresh fundamental input continues to suggest a strong market underpinning", said Jim Ritterbusch, president of Ritterbusch & Associates, in a Tuesday note.

There is no sign yet that OPEC is prepared to relax its supply restraint.

Even so, USA production is expected soon to rise above 10 million barrels per day, close to Saudi levels, due largely to soaring output from shale drillers, government data shows. Only Russia and Saudi Arabia produce more.

However, some analysts believe market participants are getting to optimistic, especially given expectations for an increase in US shale production.

Pump jacks bring oil up from wells in North Dakota.

US crude production was forecast to climb by 970,000 barrels per day (bpd) in 2018 and rise another 580,000 bpd to 10.85 million bpd in 2019, the EIA said in a monthly report that provided the agency's first outlook for next year.

OPEC members don't want Brent oil to rise above $60 a barrel because higher prices could bring more supply from shale output, Iran's oil minister said. "But for now, the bullish trend remains intact as prices remain above key supports".