(MENAFN- ProactiveInvestors)
Oil prices were on the back foot again on Thursday as the US dollar strengthened making crude more expensive and as the market remains well supplied.
In London trading Brent crude was down 0.6% changing hands at US$61.70 while West Texas Intermediary futures were more than 1% lower.
Wednesday’s figures from the American Petroleum Institute revealed a weekly increase in the oil surplus after three weeks’ of decline.
Traders now await the more closely followed Department of Energy inventory report to see whether there’s a repeat of the 1.3mln increase seen in the API stats.
It adds to the bear case that crude markets are simply too well supplied to justify the recent rally in both Brent and US prices.
Next week’s OPEC meeting will bring nothing but more of the same according to analysts at Swiss bank UBS.
OPEC is scheduled to meet in Vienna on Friday June 5 and UBS analyst John Rigby reckons that the producer’s cartel will continue to defend its share of a clearly oversupplied crude market rather than attempt to support prices with by reducing output.
“While OPEC again is facing continued oversupply lower oil prices do appear to be having the intended effect of reducing investment by non-OPEC producers” he said in a note.
“Thus we see no reason for the GCC (Gulf Cooperation Council) members to shift their position and hence no change from OPEC.”
Excluding any unplanned outages Rigby expects OPEC will maintain ‘robust’ production levels and he says this would imply crude prices are currently towards to top end of expectations until the physical market really begins to tighten.
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