On Tuesday, crude oil futures gained to reach its highest settlement in 2015.This advance came in response to positive comments by the oil minister of Saudi Arabia while investors have now shifted their attention to the OPEC (Organization of the Petroleum Exporting Countries) meeting which will take place on Friday this week.
Added to this, a declining U.S. dollar (USD), as well as expectations that weekly data will show a decline in stock piles, also boosted the commodity.
WTI crude oil for delivery in July (CLN5, -0.67%) traded at $61.26 a barrel, up 1.8%, or $1.06, on the NYMEX. This marked the highest settlement price since the end of last year.
Meanwhile, on the ICE Futures exchange in London, Brent crude oil for delivery in July traded at $65.49 a barrel, up 0.9%, or 61 cents.
According to Naeem Aslam, chief market analyst at AvaTrade, with comments from OPEC as well as the pending OPEC meeting expected on Friday, we can expect to see volatility in the oil price.
On the 5th of June, OPEC is expected to meet and analysts expect the oil cartel to maintain its current production ceiling of 30 million barrels a day. Added to this, Saudi Arabia is expected to stand its ground regarding output and maintaining its market share.
Interestingly, according to a recent survey by Reuters, Saudi Arabia actually outputted 31.2 million barrels a day in May.
Based on this, Aslam commented that it is evident that Saudi Arabia is more concerned about maintaining its market share than in the stability of the oil price.
On Monday, Ali al-Naimi, the Saudi oil minister, said in Vienna that his country’s strategy to maintain and defend its market share is currently working.
According to Michael Poulsen, an oil analyst at Global Risk Management, al-Naimi’s comments are a clear indication that there will be a decision not to cut output at the meeting on Friday.
Added to this, some analysts believe that OPEC might take a different route on Friday and in fact increase their output target.
I guess for now all we can do is wait for the meeting on Friday to have a clear understanding of OPEC’s next move and how this will impact the crude oil price.
MT4 Chart: Oil
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