Oil steady as Brent crude hovers below $50 ahead of OPEC meeting
Oil prices were little changed on Friday ahead of a key meeting of major oil producing nations next week, with Brent sitting below the $50 per barrel level that was briefly breached for the first time in six weeks in the previous session.
International benchmark Brent crude futures were at $49.28 per barrel 0501 GMT, down 2 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $46.89 per barrel, down 3 cents.
During the previous trading session both benchmarks rose to their highest levels since early June in choppy trading, having been pushed higher by data showing U.S. crude and fuel inventories fell sharply last week.
“The impact of strong drawdown in inventories announced earlier this week was still lingering in the market,” ANZ bank said.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said the decline in inventories could continue in the near term, although overall stock levels this year would likely be higher than in 2016.
U.S. oil stocks, at roughly 490 million barrels, remain well above the five-year average, while U.S. production has increased almost 12 percent since mid-2016 to 9.4 million bpd.
An abundance of global crude supplies has put pressure on oil prices and key members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet non-members in St. Petersburg, Russia, on Monday to discuss market conditions and whether more action is needed to support prices.
“The consensus view in the market is there won’t be any change,” said Spooner.
OPEC, together with some non-members like Russia, has pledged to reduce the global glut by cutting production by 1.8 million barrels per day (bpd) between January this year and March 2018.
U.S. investment bank Jefferies also said that “actions from the next OPEC/non-OPEC working committee meeting seem unlikely,” although it added that “if OPEC is to achieve its objective of bringing OECD inventories back to normal levels it will need to take further steps.”
Traders have been watching reports that the world’s top crude producer, Saudi Arabia, is working to draw down bloated stocks particularly as other OPEC members, including Iraq and Libya – which are both exempt from cutting – are raising output.