Oil rises as dollar retreats; Comments by Saudi Arabia's oil minister lend support
Oil prices were boosted on Tuesday as dollar retreated from highs and after the comments by Saudi oil minister Ali al-Naimi. Meanwhile, traders awaited a key meeting of the Organization of the Petroleum Exporting Countries on Friday.
On the New York Mercantile Exchange, West Texas Intermediate futures for July were trading up 75 cents, or 1.3%, at $60.95 a barrel.
On London’s ICE Futures exchange, Brent crude for July delivery recently rose 53 cents, or 0.8% to $65.41 a barrel.
Meanwhile, Vienna where OPEC is due to meet on June 5 was in the center of markets' attention. “We expect Saudi Arabia and OPEC to stay the course and continue their policy of letting prices balance the market from the supply side,” said Michael Wittner, head of oil research at Societe Generale.
The cartel is expected to keep its oil production ceiling at 30 million barrels a day, as producers like Saudi Arabia continue their strategy of defending their market share.
That strategy is working, the Saudi oil minister Ali al-Naimi said on Monday as he arrived in Vienna.
According to Naimi, oil demand is
picking up and supply is slowing down, however, oil glut is still a problem.
Michael Poulsen, oil analyst at Global Risk Management, thinks that his comments basically confirm consensus expectations of a non-output-cut decision at Friday's OPEC meeting.
Some analysts, however, note that there is actually a chance that OPEC might hike its official output target, rather than cut it, for instance, to increase its target to 30.5 million barrels a day, which would be closer to its actual production.
This move would underpin OPEC’s resolve for the new policy where every member country is producing as much as it can and send a clear signal to shale producers and other non-OPEC suppliers, says JBC Energy. Further, it would “put the organization back into the driving seat, following some commentators’ doubts of its relevance after the last meeting,” JBC said.
