The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Brent oil prices failed to sustain over the $70 threshold mainly due to falls on the U.S. stock exchange and with profit taking in the oil market after last week’s price rally. Increases in U.S. oil production and oil stockpiles also impacted the fall in prices.
However, OPEC’s de facto leader, Saudi Arabia, and the de facto leader of non-OPEC participating countries, Russia, want to have a longer-term and stronger collaboration for oil supply control.
Last week’s oil markets will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA crude oil production in the U.S. and weekly U.S. Baker Hughes rig count.
Brent oil began the week with a fall to $70.12 due to a four-count increase in U.S. oil rigs from the previous week, according to Baker Hughes data.
However, it slid down to $70.11 owing to the growth of 5.32 million barrels in U.S. inventories, as detailed in the weekly API report on Tuesday.
It continued down to $69.53 through a rise in the U.S. dollar and an increase of 1.64 million barrels in U.S. commercial oil inventories as detailed in the weekly EIA report on Wednesday as well as an increase in U.S. crude oil production by 26 thousand barrels per day to 10.4 million barrels per day.
However, it recovered and settled at $70.27 at the end of the week through a six-oil rig decrease in the U.S., according to Baker Hughes data.
No concrete details have been issued over a revision to the existing oil cut agreement ahead of OPEC’s June meeting. Nonetheless, last week OPEC’s de-facto leader Saudi Arabia’s Crown Prince Mohammed bin that Saudi Arabia and the Russia Federation would consider a longer-term agreement for 10 to 20 years as opposed to the typical short-term solution for cooperation to control oil supply.
Following the prince’s declaration, the Kremlin and OPEC’s Secretary General Barkindo also endorsed such a statement in the face of increasing competition from electric vehicles, the growth in renewable energy and with greater U.S. oil production.
Both Saudi Arabia and Russia said they are willing to sign this new agreement at the end of this year or at the June meeting should the surplus over the five-year average in global oil inventories be removed.
A declining trend in the drawdown of global inventories will continue but at a slower pace than previously despite the gradual rise in U.S. oil production, so this week Brent could reach a price of $70.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.