Last week Brent crude oil traded in the range of $ 49.90 to $ 46.28 per barrel. The maximum price change exceeded 7%. The ministers of energy from the five countries that are members of the OPEC monitoring committee, as well as the Saudi Arabia Minister of Energy, will hold a meeting on July 24th in Russia.
At this meeting, a recommendation may be adopted to change the terms of the current OPEC agreement on limiting oil production. OPEC officials said that a decision could be made to limit production in Libya and Nigeria, but such a step would meet with resistance from other countries. Russia announced that it was ready to consider options for modifying the agreement to reduce production, if necessary. On Wednesday, the weekly report of the Energy Information Agency (EIA) showed the oil commodity stocks decrease. The cumulative reserves fall (13.4 million barrels) was the highest since September.
Meanwhile, the total number of drilling rigs has reached 763 – the maximum level since April 2015. Also on Friday came a report that the oil production in the USA increased by 88 thousand barrels per day to 9.34 million barrels per day. This report increased fears that an increase in the production of shale oil in the United States would erase all the efforts of other major producers aimed at restoring the balance in the market.
In May, in Vienna, the OPEC countries and other major oil producers, including Russia, agreed to cut oil production by 1.8 million barrels per day until the end of March 2018. Until now, the agreement to reduce production has not had a significant effect on the level of oil reserves, mainly due to the continued increase in the shale oil production in the US and the increase in supply from manufacturers who have not signed an agreement to reduce production, for example, Libya and Nigeria. Meanwhile, UBS analysts believe that Brent and WTI will rise respectively to $ 58 and $ 60 per barrel by the end of the year.
In their opinion, the supply growth in the third quarter will start to lag behind the increase in demand, the reserves will begin to drain more actively, and quotes will rise. Citigroup also predicts a rise in oil prices. Experts believe that the recent Oil Brand price increase may be an indicator of a new rally in the market, which will be supported by a reduction of raw material stocks in the second half of the year.