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Crude prices down on reports of possible increase in OPEC production

23 May 2018 18:00 (UTC+04:00)
Crude prices down on reports of possible increase in OPEC production

By Sara Israfilbayova

World oil prices decline on May 23, investors win back a report on a possible decision by OPEC to increase oil production.

Brent futures fell 0.5 percent, to $79.14 a barrel, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014, U.S. West Texas Intermediate (WTI) crude futures eased 0.4 percent, to $71.95 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014, Reuters reported.

On May 22, the media said that OPEC at a meeting in June could decide to increase production. Such a decision is possible because of fears about a possible decrease in the supply of raw materials from Iran and Venezuela, which contributed to the growth of oil prices to the highest levels since 2014.

“It seems that the market is pausing at current levels. If sanctions are imposed on Iran, most OPEC producers would like to pump more oil, especially given higher prices,” the market strategist of CMC Markets, Michael McCarthy said.

Traders also drew attention to the data of the American Petroleum Institute (API) on reserves in the US. So, for the working week that ended on May 18, the country’s oil reserves fell by 1.3 million barrels. At the same time, analysts expected a 2.8 million barrel drop in inventories. Later on May 23, official data on oil reserves in the country from the U.S. Energy Department will be published.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

OPEC and its partners decided to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

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Sara Israfilbayova is AzerNews’ staff journalist, follow her on Twitter: @Sara_999Is

Follow us on Twitter @AzerNewsAz

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