Stocks fall with U.S. dollar; oil slips before OPEC

Crude Oil Pump

Crude Oil Pump

Saudi Arabia is ready to add back production it had agreed to curb in 2016, even though it is benefiting hugely from a almost 75% spike in oil prices.

Russia, which isn't a member of OPEC but has gained influence in the oil group, wants an increase of 1.5 million bpd.

Weekly U.S. production remained at a record 10.9 million bpd.

"An agreement was reached yesterday to release the equivalent of about 1m barrels to the market; it will be distributed pro rata", Al-Falih said on Friday, of an Opec committee meeting on Thursday.

Saudi Energy Minister Khalid al-Falih has signalled a compromise was in the works as a big hike in production was "politically unacceptable" to some members.

Russian Federation has proposed OPEC and non-OPEC producers raise output by 1.5 million barrels per day (bpd), effectively wiping out existing production cuts of 1.8 million bpd that have helped rebalance the market in the past 18 months and lifted oil LCOc1 to $75 per barrel.

While Saudi Arabia's cutting by more than required has helped Opec's compliance, involuntary reductions in Venezuela amid economic crisis and in Angola due to natural decline have had a larger impact and can not be reversed at short notice.

It was up 1.2 per cent at $73.95 a barrel at 1:13 pm in Singapore on Friday.

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Oil prices have spiked by as much as 20% this year, in part because OPEC has produced even less than was foreseen under the 2016 agreement, which was supposed to reduce supply by 1.8 million barrels per day.

Also of concern was the USA immigration crisis after Trump backed off an unpopular hardline policy that had led to children being separated from their parents when they crossed illegally into the United States from Mexico.

He was echoing comments from his Iranian counterpart, Bijan Namdar Zanganeh, who had rejected any production increase when he arrived in Vienna on Tuesday, saying OPEC shouldn't be doing Trump's bidding.

"We want to prevent the shortage and the squeeze that we saw in 2007-08", Falih said, referring to a time when shortages sent premium-crude-oil prices soaring to an unprecedented $150 per barrel and ushered in a major boom-bust cycle that devastated the oil sector for a decade.

Observers believe a face-saving deal could be brokered if members simply stopped over-complying with the current pact, and agreed to stick to the original reduction quotas - which would bring several hundred thousand more barrels to the market each day.

Zanganeh has said that if Opec returned to regular compliance, the group would raise output by around 460,000 bpd.

Iraq's energy minister said it was clear that Opec and its allies would change course after 18 months of production curbs, in an effort to rebalance crude supply and demand. He warned his fellow oil producers about rising consumer anxiety and the potential for high prices to have a negative impact on demand. He said Opec could meet again in September to adjust the deal.

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