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Crude Oil Meanders Ahead of OPEC Meeting

May 24, 2017 at 16:18 by Vladimir Vyun

Prices for crude oil meandered today, struggling to establish a clear trend (though currently it is trading below the opening level), as traders were nervous and uncertain ahead of tomorrows meeting of the Organization of Petroleum Exporting Countries as well as several non-OPEC producers. They will discuss an extension of oil production cuts. Markets count on a nine-month extension. And indeed, according to reports, the Joint Ministerial Monitoring Committee, which consists of six OPEC and non-OPEC nations, agreed to extend the cuts till March 2018.

Yet the extension is far from guaranteed as some members of the output reduction agreement may oppose prolonging the deal. Though experts do expect some extension, and there is rather uncertainty about for how long that extension will be. Additionally, analysts are worried that the prolongation is priced in. And if it will be indeed for nine months, let alone for a shorter time, then prices will drop.

Meanwhile, the Energy Information Administration reported that US inventories of crude dropped by 4.4 million barrel last week. The drop was almost two times the decrease predicted by specialists. It was the seventh weekly decline in a row.

July future for WTI crude oil dropped 0.76% to $51.08 per barrel as of 16:11 GMT on NYMEX today. Brent crude for delivery in June also declined 0.76% to trade at $53.74 per barrel on ICE.

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