The oil price seems range bound in the mid-forties as traders sit on the fence in advance of the end of month OPEC decision.
The dollar strengthened this week adding extra pressure on commodities and in early trading on Friday, Brent crude was holding above US$46 with WTI close to US$45 a barrel.
OPEC diplomacy continued at a frantic rate all week with the OPEC Secretary General in Venezuela and in Ecuador meeting with the leaders of both countries.
In Caracas, Mohammed Barkindo praised the Venezuelan President Nicholas Maduro for his efforts to support the agreement.
‘Sufficient will’ at OPEC
In a televised address following the meeting, Maduro said he believed there was “sufficient will” among OPEC to take steps needed to ratify the Algeria agreement.
He added that he believed they could reach “a forceful agreement to reduce production and construct new mechanisms to stabilise the market.”
In Ecuador, Secretary General Barkindo met with Ecuadorian President Rafael Correa and Foreign Minister Guillaume Long and they both praised each other’s efforts to help bring stability to the market.
Next stop on the agenda this week will be in Iran for the busy Secretary General.
Meanwhile many OPEC and Non-OPEC ministers gathered at the 18th meeting of the Gas Exporting Countries Forum in Doha.
The Saudi Arabia energy minister, Khalid al Falih told reporters he was “optimistic” a deal could be reached.
Apart from participating in the agenda of the GECF, ministers held bilateral meetings to discuss the state of the proposed OPEC agreement.
Russia is extremely important and vocal in its support
The support of Russia is seen as extremely important for the success of any deal and Russia has been vocal about its support.
The market is nervously waiting to see if this will materialise.
The Russian news agency, TASS said that Russian oil minister Alexander Novak will “take part in informal consultations with representatives of OPEC,” on the sidelines of the gathering.
Crude supply remains abundant around the world and there’s no sign of anyone cutting production in advance of the OPEC meeting.
Stockpiles continue to rise in the US, according to the Energy Information Administration. Last week saw an increase of 5.27 million barrels, way above the 1.5 million barrels expected by the market.
US crude supplies still very high
American crude supplies now exceed 490 million barrels, the highest seasonal level seen in the past 30 years.
This is quite bearish for the market at a time when refinery demand has been on the increase, operating now at 89.2 percent of capacity.
Gasoline supply as well as distillates were also higher last week.
While Donald Trump is gathering his cabinet hopefuls, the market believes the Trump presidency will be good for the American energy sector.
Major new discovery in West Texas
Last week, USGS Energy Resources reported a major new oil and gas find in West Texas.
The company reported the prospect of 20 billion barrels of oil with billions more of natural gas at the Wolfcamp Shale geologic formation.
This discovery is estimated to be about three times the size of shale discoveries found in 2013 in Montana and Dakota.
Every new US president had as its policy hopes to make the US energy independent.
Trump vs Saudi Arabia
Trump has not been too vocal on his plans, but he did caution in March this year that he would curtail oil imports from Saudi Arabia.
About 3.4 million barrels of OPEC oil is imported into the US despite the growth in domestic production, with more than a million barrels coming from Saudi Arabia.
The country’s energy minister Al-Falih told the Financial Times this week that Trump needs to “see the benefits” and suggested that Trump’s energy advisors will make him see sense “that blocking trade in any product is not healthy,” especially since “energy is the lifeblood of the global economy.”
The uncertainty ahead of the OPEC meeting is bound to stall any movement in the oil price for the next couple of weeks.
Traders remain cautious ahead of the official meeting on November 30th.
In the meantime, the conversations and the shuttle diplomacy is bound to continue in the hopes of securing a more inclusive agreement.