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Oil Prices Hover as OPEC Meets

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12/07/2018 | 12:42pm CET

By David Hodari

Crude prices wavered Friday as investors awaited a decision on possible output cuts at a meeting of the Organization of the Petroleum Exporting Countries and its allies in Vienna.

   -- Brent crude, the global oil benchmark, edged up 0.2% to $60.30 a barrel 
      on London's Intercontinental Exchange 
   -- West Texas Intermediate futures, the U.S. oil standard, were down 0.3% at 
      $51.34 a barrel on New York's Mercantile Exchange. 


OPEC+: OPEC members, which began their summit Thursday, sat down with allies outside the cartel Friday to discuss the prospect of an oil production cut to support prices after heavy selling in recent weeks.

Brent crude and WTI have both fallen 17% in the past month on a combination of rising supply and concerns over the global economy.

OPEC agreed to a cut in principle Thursday, but the details remained unclear. Remarks from Iran's OPEC governor late Thursday suggested that Iran, Libya, Nigeria and Venezuela--all countries that have opposed past production cuts--were unhappy with the deal.

Saudi Arabia's oil minister remarked Friday morning that he wasn't confident in the cartel's ability to agree to a production cut with Russia and other non-OPEC allies.

"Everyone wants to get their own arrangements and special deal. Finding common ground is difficult, but then it always has been," said Giovanni Staunovo, director and commodity analyst at UBS Wealth Management. "I expect some sort of deal will be announced, but whether it will be sufficient for the market is another question."

Crude stocks: U.S. Department of Energy figures showed Thursday a decrease in crude inventories by a larger-than-expected 7.3 million barrels last week amid record-low imports. Alongside rising exports and factoring in oil products, that made the U.S. a net oil exporter last week for the first time in 75 years.

"This should be nothing more than a brief episode, however," Commerzbank analysts said in a note.


Oil Supply: Crude prices have plunged by 30% since their October four-year highs, prompting the current talks between OPEC and its allies about potential cuts to stabilize the market.

While positive signs came out of the meeting last weekend between Saudi and Russian leaders at the Group of 20 meeting in Buenos Aires, the conclave of major producers in Austria this week has yet to yield an agreement.

Still, analysts remained optimistic about a deal. The Saudi energy minister's forecast for a one-million-barrels-a-day cut was the most likely outcome, UBS's Mr. Staunovo said.


   -- OPEC+ headlines will likely be the strongest price driver into the 
   -- Beyond that, investors will parse OPEC and Energy Information 
      Administration monthly reports next week to gauge the impact of lower 
      Canadian supply and weaker oil prices. 

Write to David Hodari at David.Hodari@dowjones.com

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