Oil prices are staying close to their opening figures this morning after enjoying a three week high. After word came out that Saudi Arabia’s energy minister may be supportive of putting a cap on production, the market began to bounce higher. He did not make a specific committment in regards to decreasing ouput, but he did imply that they will do whatever they can to help bring prices back to decent levels.There has been talk of slowing and/or freezing production on a global-scale for quite some time now. If the world’s biggest oil producer decides to lead the charge in the fight against low prices/slim margins, then there will be a much better chance for oil prices to be more stable by 2017.
According to the International Energy Agency, global output is growing slower than demand. They believe this to be due to decreased output by non-OPEC members and increased demand in general. Some believe that non-OPEC output is being understated and that the supply glut is still much alive. With OPEC output being up 150,000 barrels per day to 33.39 million barrels per day, it may be difficult for some to believe that global action will be taken anytime soon.
Some speculators might be saying that is unlikely for the Saudi’s to reduce output, especially since they just reached record high production levels, despite their knowledge of the continued global supply glut. The argument behind this logic, could be that Saudi Arabia wants to maintain its market share and will not do anything that could jeopardize it.
A country such as Venezuela on the other hand is one nation that can hardly afford to continue producing, let alone feed its own citizens. According to Forbes, Venezuela is reportedly “drowning” in oil reserves and begging OPEC/non-OPEC oil ministers to join them in cutting production to help bring oil back to $70.
As of 11:20 am, crude oil on WTI is up .0088 , while on the NYMEX, heating oil is up approximately .0148 cents and RBOB is down .0014.
In the news:
- A weaker US dollar today is keeping prices up
- U.S. retail data shows sales were flat for the month of July
- Iran lowered its price on light crude exports for Asia to 1.30 a barrel for the month of September.