Iran Confirms Attendance At OPEC Meeting Driving Oil Prices

Talk about indecision. Oil speculators have been all over the map over the last few days. As we move into the weekend oil prices remain in the green although sentiment remains bearish. WTI oil is trading at 46.93 and Brent oil at 49.38, neither are able to recover their highs just days ago.

“It is the aftershocks of Wednesday’s disappointing oil report and the strengthening of US dollar that are helping to apply renewed downward pressure on crude prices,” City Index analyst Fawad Razaqzada said.

The stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that tends to dampen demand and price levels.

The US energy department said on Wednesday that American crude oil inventories soared 2.5 million barrels last week, indicating poor demand.

Both main oil contracts plunged on the news, which confounded forecasts for a fall and fanned worries about the stubborn global supply glut. Meanwhile, hopes for a deal to limit oil output were dealt a blow.

The commodity entered a bull market last week – a 20% rise from recent lows – and rallied for seven straight sessions thanks to news that export grouping OPEC and Russia would hold talks on output to address the oversupply crisis.

Oil gained more than 20% in the first three weeks of August on talk of a potential deal by oil exporters to freeze production levels to try support prices.

“Speculators pushed the price up on expectations of an output freeze, which is unlikely to happen,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. “I see downside risks if those expectations are being scaled back.” US investment bank Jefferies agreed, telling clients on Thursday that even if a freeze were agreed, “the effects on the physical market would appear to be minimal”.

“We do not expect a production freeze — let alone a production cut — from the OPEC meeting,” it said in a report.

The Iranian oil minister confirmed Thursday he would attend a meeting in Algeria where some OPEC members may consider artificial market actions.

SHANA, the official news agency for the Iranian Oil Ministry, reported Oil Minister Bijan Zanganeh is scheduled to appear in what was described as a “closed-door” meeting on the sidelines of next month’s International Energy Forum in Algeria.

According to SHANA, “sources say” members of the Organization of Petroleum Exporting Countries will “probably” reconsider early 2016 proposals to freeze crude oil production levels in an effort to artificially support higher crude oil prices.

Saudi Arabia revived oil production freeze talks in mid-August, adding fuel to a rally in crude oil prices, which have recovered considerable ground since collapsing below $30 per barrel in early 2016.

Further support for a gain in crude oil prices could emerge from the development of a low-pressure system moving west toward Florida and potentially the U.S. Gulf of Mexico. A hurricane in the area could curb regional crude oil production, though a storm-tracking system maintained by British energy company BP so far shows no action taken.