At Algiers summit, OPEC will keep a wary eye on Donald Trump

At Algiers summit, OPEC will keep a wary eye on Donald Trump

Oil prices steadied on Thursday after US President Donald Trump called on Opec to "get prices down now!", slowing an upward surge that has pushed the market towards four-year highs.

Global benchmark Brent crude was up 8 cents at $79.48 a barrel after rising half a percent on Wednesday.

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning showing that U.S. commercial crude inventories decreased by 2.1 million barrels last week, maintaining a total U.S. commercial crude inventory of 394.1 million barrels.

Gasoline stocks fell 1.7 million barrels, compared with analysts' expectations for a 104,000-barrel drop.

Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased USA crude oil exports, which have been supported by the widening differential between USA benchmark WTI prices and the global benchmark, Brent crude.

OPEC members will meet this weekend with non-OPEC producers such as Russian Federation to discuss production levels.

Prices have traded mostly below $80 over the past few months on fears trade tensions between the US and China could damp global demand.

Still, many analysts insist that Trump's demands and OPEC's efforts notwithstanding, crude breaching the $80 threshold is certain: Bjarne Schieldrop, chief commodities analyst at SEB Markets, said, "Brent is definitely fighting the $80 line, wanting to break above, but this is likely going to break very soon".

Crude inventories fell 2.1 million barrels in the week to September 14 to 394.1 million barrels, the lowest level since February 2015, EIA data showed.

He said, "They're not huge all around the world are going down, and USA markets are going up".

Reuters reported that traders and investors have loaded up on bullish Brent oil bets this week, after signals that Saudi Arabia is in no rush to increase production, even with the price near Dollars 80 and as buyers grow uneasy over the impact of United States sanctions on Iranian supply. The freeze on output levels has helped to remove over-capacity from the market, meaning oil producing nations are benefiting from higher prices.

Brent crude for November delivery was down 3 cents at $78.67 a barrel by 7.37am. If anything, they are driving prices higher as the United States defends many of their members for very little $'s. While Saudi Arabia and Russian Federation have recently boosted output to compensate, it's unclear whether they're willing or able to offset all the losses from Iran. Many buyers have already scaled back Iranian purchases, and it was unclear how easily other producers, such as Saudi Arabia, Iraq and Russian Federation, can compensate for lost supply.

The current price action confirms the notion that the crude oil market is "fragile" and highly sensitive to the upside on any news that even hints at lower supply.

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