UAE energy minister said OPEC members ready to cooperate

The price of oil today approached a new low of $26.21 per barrel today, the lowest since May 8, 2003, when it hit $26, before bouncing up on news of a possible production cuts from OPEC. The Wall Street Journal’s Summer Said reported on Twitter that the UAE’s Energy Minister Suhail bin Mohammed al-Mazrouei said the group was ready to make cuts, but saw non-OPEC production falling in the future.

“The positive thing is the current market is forcing everyone not to increase output,” said al-Mazrouei. “I’m optimistic that the balance will happen this year despite the oversupply and stocks overhang.” Non-OPEC supplies are expected to drop up to 800 MBOPD while global demand growth is seen at 1.3 MMBOPD.

CNBC reported that traders rushed to buy bearish crude options, particularly for $25 puts, as concerns over crude oil storage persist. Crude inventories in Cushing hit all-time highs just shy of 65 million barrels last week.

Goldman Sachs said in a note to its clients it expected oil prices to fluctuate between $20 a barrel, at the operational stress level, and $40, at the financial stress level, with significant volatility and no trend until the second half.

International crude oil benchmark Brent gained on news that OPEC were looking to cooperate on an oil production “freeze,” but it appears OPEC members themselves are unwilling to cede market share, even to each other. Iran recently reduced the price of its crude oil to Asia in an attempt to undercut Saudi Arabia in one of the world’s key demand centers.

“There’s a price fight within OPEC for Asian market share, and there are worries that storage capacity is going to be breached,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.

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