OPEC Doesn't Want Brent Over $60 a Barrel, Says Iran's Oil Minister

OPEC Doesn't Want Brent Over $60 a Barrel, Says Iran's Oil Minister

The Iran situation "has the market a bit on edge", said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. Oil has held above $60 a barrel since late December in NY with USA crude stockpiles contracting and American oil drilling stalling out.

Brent crude paired gains after the comments.

OPEC and 10 producers outside the cartel, including Russian Federation, agreed late last year to extend an accord to hold back crude output by almost 2% through the end of this year.

"The fact that we're seeing oil prices not only stable but creeping up above $60 is, on the surface, good, but I think there are other things here to talk about", specifically, the differential between benchmark Canadian and USA oil having widened to its biggest gap in years, with a barrel of Canadian crude trading for roughly $25 less than WTI due to transportation bottlenecks and overabundant stocks.

Abhishek Kumar, senior energy analyst at Interfax Energys Global Gas Analytics, was more succinct in his appraisal of the market: "Prospects for further increases in USA oil production amid recent improvements seen in oil prices continue to promote bearish sentiment".

OPEC's cuts are helping to reduce global inventories, even as production continues to rise in the United States.

Yet, surging US production could offset some of the cuts from OPEC producers, as USA production rose to 9.78 million barrels a day (MMBPD) in the latest week, according to last Wednesday's report. Only Russia and Saudi Arabia produce more. Iran said on Tuesday OPEC members were not keen on increased prices.

Venezuela's economic troubles have hit the country's oil output, which is at near 30-year lows, but Iran's output has not been affected by a wave of anti-government protests.

"OPEC's policy is to bring inventories down to their normal levels and will stay the course, unless the disruption in supply of something like 1,000,000 barrels per day persists for more than a month, and causes shortages of crude supply to consumers", the source noted. Venezuela's oil production has been falling steadily over the past months, and OPEC's crude oil production remained largely unchanged from November in December, mostly thanks to a 50,000-bpd decline in Venezuela's production, a Bloomberg survey showed last week.

The rise in prices is expected to drive gains in USA production during 2018, offsetting curbs by others. Meanwhile, U.S. explorers cut the number of rigs searching for oil last week by the biggest margin in two months.