"OPEC+ Meeting Date Likely to Be Set Soon... Anxiety Eases"
US Gasoline Inventories Rise After Sharp Price Surge... Concerns Over Demand Decline
[Asia Economy Reporter Hyunwoo Lee] International oil prices sharply dropped across the board as concerns eased following reports that Saudi Arabia and the United Arab Emirates (UAE) successfully reached an agreement on oil production volumes. The major oil-producing coalition OPEC Plus (OPEC+) is also expected to resume talks soon and announce details regarding the August production volume and extension of the production cut plan, which had failed in the previous meeting.
On the 14th (local time), the Wall Street Journal (WSJ), citing sources, reported that Saudi Arabia and the UAE agreed to raise the production baseline. It is known that Saudi Arabia and the UAE agreed to increase the production baseline to 3.65 million barrels per day starting from April next year. The UAE had previously insisted that its production baseline should be raised from the existing 3.2 million barrels per day to 3.8 million barrels per day. The date for the resumption of the OPEC+ meeting is also expected to be announced soon.
With this news temporarily easing concerns, international oil prices showed a downward trend. On the New York Mercantile Exchange (NYMEX), the price of West Texas Intermediate (WTI) crude oil closed at $73.13 per barrel, down 2.8% from the previous session. On the London ICE Futures Exchange, North Sea Brent crude was trading at $74.70 per barrel, down 2.31% from the previous day.
The UAE Ministry of Energy issued a cautious statement saying, "An agreement has not yet been fully reached, and negotiations are ongoing," adding that "support from other OPEC countries is necessary." However, market expectations that the agreement will succeed are growing. Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch in an interview, "If a final agreement is reached, the fear of a full-scale production war will disappear."
Concerns that demand might weaken due to rising U.S. gasoline and refined product inventories amid recent price surges also contributed to the decline in oil prices. The U.S. Energy Information Administration (EIA) reported that gasoline inventories increased by 1 million barrels, a significant difference from the market forecast of a 1.8 million barrel decrease. Refined product inventories also rose by 3.7 million barrels, contrary to the market expectation of an 870,000 barrel increase, influencing the sharp drop in oil prices.
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