Oil nudges up, hovers below US$50 level ahead of OPEC meeting

oil12SINGAPORE: Oil prices nudged up on Friday ahead of a key meeting of major oil producing nations next week, but held below the US$50 per barrel level that was briefly breached for the first time in 6 weeks in the previous session.

International benchmark Brent crude futures rose 6 cents to US$49.36 per barrel in thin trading by 0116 GMT.

US West Texas Intermediate (WTI) crude futures were at US$46.99 per barrel, up 7 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 US 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 said in a research note.

Despite the drop, US oil stocks, at roughly 490 million barrels, remain well above the five-year average, while US production has increased almost 12% 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.

OPEC, together with some non-members like Russia, has pledged to reduce the global glut with a 1.8 million-barrel per day (bpd) production cut between January this year and March 2018.

The market has been watching reports that the world’s top crude producer, Saudi Arabia, is working with other countries to draw down stocks and reduce supply, particularly as other OPEC members, including Iraq and Libya, are planning increases in output.

“Brent oil still targets US$50.35 per barrel,” said Reuters technical commodities analyst Wang Tao.