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Uncertainty surrounds OPEC's next move in the wake of US President Donald Trump's latest call for Saudi Arabia and their allies to boost crude oil production.
The Saudis, however, may find it difficult to find an incentive to increase their production. The Saudis need a barrel price of oil of about $ 85 a barrel to balance their budget this year, against a forecast of $ 73 in September, Bloomberg reported Monday, citing data from the Monetary Fund international.
Marshall Steeves, an energy markets analyst at Informa Economics, told MarketWatch that the figure of $ 85 seemed "rather high," but that "Saudi Arabia's main incentive to increase production is to stop losing market share to unconventional US producers while maximizing their own revenues. "
"They might decide, together with Russia, to increase production quotas at their meeting in June, but it's another day," he said. For now, the moderate rebound in US prices "looks like a technical pullback after the June WTI failed to try Friday's low again."
West Texas Intermediate based in the United States for delivery in June CLM9, + 0.54% increased by 20 cents, or 0.3%, to $ 63.50 per barrel. Prices fell 2.9% to settle at $ 63.30 a barrel on the New York Mercantile Exchange on Friday, recording a 1.2% loss for the week, after seven consecutive weeks of gains, according to reports. Dow Jones Market Data.
In contrast, June Brent crude LCON9, -0.08% The global benchmark fell 11 cents, or 0.2%, to settle at 72.04 dollars a barrel after a brief rise. The contract, which will expire at Tuesday's settlement, fell 3% on Friday.
Trump has "repeatedly tried to influence OPEC's production decision-making process, but there is no indication that it has been successful," said Craig Erlam, Senior Market Analyst at Oanda.
"So, why are the markets so attentive now? They are not really. Oil prices seemed to be overexploited, and Trump's comments – intentionally or not – offered the perfect opportunity to reduce exposure and allow the market to correct, "he said daily. This has led to recent losses.
Oil contracts ended Friday, after OPEC Secretary-General Mohammed Barkindo said he had not spoken to Trump, and the Wall Street Journal reported that the Saudi minister of Energy, Khalid al-Falih, did not participate in these discussions either. Trump later tweeted that he had spoken to Saudi Arabia.
"We talked to Saudi Arabia and others about the increase in the flow of oil. All are in agreement. Trump tweeted on Friday.
"Trump's tweets coincided with the early weekend rally's retreat after he announced for the first time the end of the waivers and we still do not know how much, if any, additional oil will be available." OPEC and Russia could make it available, "said Steeves.
The news that the United States would put an end to waivers on Iranian oil imports pushed prices up to the highest of October 2018 on Monday and Tuesday, while there was waiting for a tightening of supplies.
Han Tan, market analyst at FXTM, said uncertainties may remain over the severity of the exemptions imposed on oil sales in Iran and whether other producers, such as Saudi Arabia and the UAE, will be able to fill the void announced 1 million barrels of oil a day before the expiry of waivers. "They end on May 2nd.
Fereydoun Hasanvand, chairman of the Iranian Parliament's energy commission, warned that if Iran's oil was fully sanctioned, oil prices would exceed $ 100 a barrel, S & P Global Platts reported, citing an internet website. Islamic Republic of Iran.
At the same time, talks are taking place behind the scenes with China and OPEC to keep up the pressure on Tehran and the US-China trade meeting. [Tuesday] open the door to a massive deal that should send shock waves to the global economy as well as to ours, "said Daniel Flynn, an analyst at Price Futures Group. "With the delicate discussions in the balance, will China use an ace in her sleeve to ask for waivers? [to allow it to buy Iranian oil?] For me, it's non-negotiable, the penalties are in effect! "
Elsewhere, May essence RBK9, -0.76% declined 0.9% to $ 2.083 per gallon. May oil HOK9, + 0.33% added 0.2% to $ 2.055 per gallon. May contracts expire at Tuesday's settlement.
On its first full trading day as a first month contract, natural gas in JuneNGM19, + 0.50% increased by 0.5% to $ 2,593 per million British thermal units.
the United States Oil Fund LP (USO) was unchanged Monday after trading hours. Since the beginning of the year, the USO has risen by 10.16%, against 10.56% for the S & P 500 benchmark over the same period.
USO currently has a SMART ETN Daily News rating of A (strong purchase)and ranks # 1 out of 108 ETFs in the Commodity ETF category.
This article is brought to you by MarketWatch.
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