Oil rebounds in Asia, Opep suspends the market

Singapore (awp/afp) – Oil prices rebounded Thursday in Asia under the effect of cheap purchases in a market that awaits the meeting of Opep and its partners on a possible prolongation of the agreement restricting their production.

At about 02:30 GMT, the barrel of light sweet crude (WTI), the American benchmark for crude oil, for delivery in January, took five cents to 57.35 dollars in electronic exchanges in Asia.

The barrel of Brent, European reference, also for delivery in January, earned 26 cents, at 63.37 dollars.

The day before, prices had fallen, fuelled by figures on the sharp rise in inventories of refined products in the United States and the fall in American oil inventories.

Members of the Organization of Petroleum Exporting Countries (Opep) and their major partners, including Russia, are meeting on Thursday in Vienna to discuss the extension of an oil agreement aimed at limiting their crude oil production in order to rebalance the market. This agreement is currently in force until March 2018.

Opep’s heavyweight, Saudi Arabia, is campaigning for a nine-month extension, but speculation about Russia’s attitude is on the rise.

Moscow may have a clear incentive to oppose an extension of the agreement or shorten its duration, as its oil field of “Sakhalin 1” in the Okhotsk Sea is expected to see its production increase, analysts say.

“The Saudis are aware that Russia must stand by them to demonstrate their strength and unity,”said Shane Chanel, analyst at ASR Wealth Advisers.

“As he would do to prevent a young child from having a crisis, the Opep will take gloves with Russia and will be keen to respect his wishes”. But “Saudi Arabia and Russia need $74 million and $72 million respectively to balance their economies and it is in their interest to extend the agreement.

Analysts warn in any case against a fall in prices if an agreement does not go far enough.

“The market has already taken into account a nine-month extension. If the Vienna Accord falls below that, prices could plummet uncontrollably,”said Jeffrey Halley, an analyst at Oanda.

On Wednesday, the WTI gave 69 cents to close at 57.30 dollars on the New York Mercantile Exchange.

In London, the Brent ended at $63.11 on the Intercontinental Exchange (ICE).