Oil prices rose in Asian afternoon trade on Friday after a fall in US crude inventories offset OPEC’s refusal to introduce production caps.
The commodity initially fell on Thursday after the Organization of the Petroleum Exporting Countries ended its meeting in Vienna with no agreement, as expected, to lower or limit output despite a global supply glut.
However, it rebounded after a US Department of Energy report showed commercial crude inventories sank by 1.4 million barrels last week, indicating a pick-up in demand in the world’s top crude consumer.
At about 0700 GMT, US benchmark West Texas Intermediate for delivery in July was 11 cents up at $49.28 a barrel while Brent for August was 16 cents higher at $50.20.
A final statement from OPEC said that since its December meeting “crude oil prices have risen by more than 80 percent, supply and demand is converging and oil and producer stock levels in the OECD (industrial economies) have recently shown moderation”.
It added: “This is testament to the fact that the market is moving through the balancing process.”
IG Markets analyst Bernard Aw told AFP that OPEC’s failure to agree a new ceiling had been priced in by investors.
“The OPEC meeting was of not much surprise and was a non-event,” he said.
“For now prices are still sideways and still have that big $50 hurdle to clear.”
Traditionally OPEC, which pumps more than a third of the world’s oil, has cut production to boost prices.
But in the most recent prolonged drop, tumbling from more than $100 in mid-2014 to close to $25 in January, OPEC — driven by Saudi Arabia — has changed tack, keeping oil flowing to maintain market share and squeeze competitors.
Aw said a continued fall in US inventories, coupled with rising demand from China and India, could lead to a “fundamental change in supply and demand”.
“The report shows that the US production and stockpiling is on the decline. That helps to ease the oversupply issue and is positive for oil prices,” he added.
