OPEC set to meet with allies on compliance


Oil traded near $50 a barrel in New York as efforts by Venezuela’s president to seize more power raised speculation the U.S. could step up sanctions.

Futures were little changed after surging 8.6 percent last week. The U.S. is said to be considering increasing sanctions against Venezuela’s oil industry, the Wall Street Journal reported, citing people familiar with the deliberations. OPEC and non-OPEC producers will convene in Abu Dhabi next week to discuss why some nations aren’t complying with output cuts.

Oil gained last week to rise above its 200-day moving average for the first time since May as concerns eased that efforts by the Organization of Petroleum Exporting Countries and its allies to curb output will be offset by rising production elsewhere. Police in Venezuela clashed with demonstrators after a vote Sunday to elect members of a new legislative body that President Nicolas Maduro insisted is needed to restore order after months of protests.

“Depending on how the Trump administration decides to proceed going forward, of course that could have implications,” including potentially blocking imports of Venezuelan crude, said Harry Tchilinguirian, a commodities analyst at BNP Paribas SA in London. “It’s very unclear at this stage what course the U.S. administration will follow.”

The U.S. buys about a third of Venezuela’s crude production and is the main buyer that pays in cash.

West Texas Intermediate for September delivery slipped 3 cents to $49.68 a barrel on the New York Mercantile Exchange at 11:05 a.m. London time. Prices climbed $3.94 last week to close at $49.71 on Friday, the highest settlement since May 26.

Brent for September settlement, which expires Monday, advanced 4 cents to $52.56 a barrel on the London-based ICE Futures Europe exchange, after adding 9.3 percent last week. The global benchmark traded at a premium of $2.91 to WTI. The more-actively traded October contract dropped 4 cents to $52.18.

Representatives of some OPEC and non-OPEC nations will meet in the United Arab Emirates capital on Aug. 7-8 to discuss why some of them aren’t fully implementing their commitment to cut output, according to an OPEC statement. Some will argue that the independent sources used by OPEC to assess compliance overestimate their production, according to two people familiar with the matter.

Oil-market news

  • Iran is optimistic that crude stockpiles will reach a “more favorable” level, the nation’s Oil Ministry news service Shana reported, citing Oil Minister Bijan Zanganeh.
  • Money managers increased their bullish WTI oil crude bets to a three-month high, according to weekly U.S. Commodity Futures Trading Commission data.

Source: bloomberg.com

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