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Petroleum industry

OPEC Maintains Output Targets, Crude Oil Prices Hit Six-Month High

Strategic Insights

— 2 min read

The Organization of Petroleum Exporting Countries (OPEC) decided to leave its output targets unchanged at a summit in Vienna, citing the fragile state of the global economy. This decision has resulted in crude oil futures rising to a six-month high, with the front-month July Brent contract on London's ICE futures exchange reaching $62.81 a barrel. The recent rally in oil prices is seen as sufficient by OPEC members, who do not want to endanger fragile economies by embarking on new cuts. The organization has pledged to raise compliance to the 2008 cuts to counteract oversupply.

Key Takeaways:

  • OPEC maintained its output targets unchanged at a summit in Vienna, citing the fragile state of the global economy.
  • Crude oil futures rose to a six-month high, with the front-month July Brent contract on London's ICE futures exchange reaching $62.81 a barrel.
  • The recent rally in oil prices is seen as sufficient by OPEC members, who do not want to endanger fragile economies by embarking on new cuts.
  • The Organization has pledged to raise compliance to the 2008 cuts to counteract oversupply.
  • OPEC's next meeting is scheduled for Sept. 9 in Vienna.
  • The US Department of Energy is expected to report a 500,000 barrel decline in crude oil stocks, a 1.7 million barrel fall in gasoline inventories, and a 1.1 million barrel rise in distillate supplies.
  • Analysts surveyed by Dow Jones Newswires expect the DOE report to show a decline in crude oil stocks, but an increase in gasoline and distillate supplies.
  • OPEC members are focused on maintaining stability in the oil market, with some analysts warning of economic uncertainties and high inventories.
  • The organization's decision has been welcomed by market participants, who are looking towards the DOE report for further guidance on the oil market.

Statistics:

  • Crude oil prices rose to a six-month high, with the front-month July Brent contract on London's ICE futures exchange reaching $62.81 a barrel.
  • The ICE's gasoil contract for June delivery was up $8.25 at $495.75 a metric ton.
  • Nymex gasoline for June delivery was down 68 points at 188.49 cents a gallon.
  • Oil prices are 40% higher since the start of 2009 due to OPEC's production cuts.
  • The US Department of Energy is expected to report a 500,000 barrel decline in crude oil stocks.
  • Gasoline inventories are expected to fall by 1.7 million barrels, while distillate supplies are expected to rise by 1.1 million barrels.

Sources:

  • Dow Jones Commodities News via Comtex
  • OPEC press release
  • David Hart, analyst at Hanson Westhouse in London
  • Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch in London
  • Dow Jones Newswires
  • US Department of Energy

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