SINGAPORE: Oil prices were stable on Thursday, but remained below $50 a barrel, as doubts over OPEC’s ability to organize a coordinated production cut weighed on markets, while firm demand and concerns over Venezuela’s stability offered support.
International Brent crude oil futures LCOc1 briefly pushed above the psychological $50 a barrel mark, but had dipped back to $49.95 by 0153 GMT (9:53 p.m. ET) , 3 cents below their last closing price.
WTI futures were trading at $49.17 per barrel, down 1 cent from their previous settlement.
Traders said Brent was struggling to break above $50 due to doubts that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers like Russia will be able to effectively coordinate curbs in output to prop up prices.
“Investors remain uncertain as to whether OPEC can implement the tentative agreement to cut production,” ANZ bank said on Thursday.
A cut is being pushed by Saudi Arabia, OPEC’s biggest producer, and it is being supported – at least by word – by Russia, not a member of the cartel but the world’s biggest oil producer.
However, OPEC’s No.2 producer, Iraq, has said it would not cut output, arguing it needs the revenue to fight Islamic State, and the government is trying to lure investors to boost output further from its current record 4.43 million barrels per day.
In U.S. crude markets, West Texas Intermediate (WTI) futures CLc1 received early support from a 553,000-barrel draw in crude inventories to 468.16 million barrels. [EIA/S]
But some analysts said that the drop in stocks was misleading.
“The decline of 553,000 barrels last week was centered on the west coast, which is isolated from the rest of the network. Inventories actually increased along the East and Gulf Coasts,” ANZ bank said.
Other factors, however, prevented prices from falling.
In OPEC-member Venezuela, spreading and increasingly violent protests against the government sparked fear in the oil industry that the country’s oil production could be affected.
In Asia, South Korea’s S-Oil Corp (010950.KS) said on Thursday that it expected refinery demand to rise in the region.
As crude is the main feedstock for oil refineries, strong refining activity tends to be price supportive of crude.