Oil futures head sideways as market takes stock of Opec antics

Oil benchmarks remained in positive territory Friday (12 May), albeit registering only modest gains, following a trading week during which a plethora of Opec and non-Opec oil producers expressed their desire to roll over production cuts slated to end in June.

At 10:53pm BST, the Brent front month futures contract was up a mere 0.28% or 14 cents to $50.91 per barrel, while the West Texas Intermediate (WTI) was up 0.02% or 2 cents to $47.84 per barrel.

On Monday, both Saudi and Russian governments came out in favour of extending Opec and non-Opec production cuts beyond June lending support to prices.

Saudi Energy Minister Khalid Al-Falih said: "I am rather confident the agreement [reached between Opec and non-Opec producers in December] will be extended into the second half of the year and possibly beyond."

Separately in Moscow, Russia's Energy Ministry noted: "We are discussing a number of scenarios and believe extension for a longer period will help speed up market re-balancing."

Then on Thursday, Iraqi oil minister Jabbar Al-Luaibi and his Algerian counterpart Noureddine Boutarfa held a joint press conference in Baghdad commenting that "all" Opec members support an extension of cuts instituted in December.

"The decision to decrease output will be for six months, and Algeria and Iraq maintain a united stand for the next cuts," Boutarfa added.

In parallel to Opec soundbites, the US Energy Information Administration (EIA) said crude inventories stateside fell by 5.2m barrels in the week to 5 May, a much steeper drop compared to a Reuters' market analysts poll projecting a decrease of 1.8m barrels.

The decline meant that at 522.5m barrels, US crude stocks were at the lowest level since February, lending further support to oil prices.

Analysts at Vienna-based JBC Energy said "Gains earlier in the week were likely down to US inventory data and continued signals of an extension to Opec/non-Opec cuts. Meanwhile, a substantial 370,000 barrels per day (bpd) upward adjustment to 2017 non-Opec supply growth was observed in its latest monthly oil report."

The latter point should give the market food for thought as US production continues to rise. Away from the oil market, precious metals registered modest gains with gold rising after the US April CPI (up by 0.2%) put pressure on the dollar and boosted the yellow metal.

At 9:59pm BST, Comex gold for June delivery was up 0.29% or $3.50 to $1,227.70 an ounce, while spot gold was 028% or $3.39 higher at $1,228.43 an ounce.

Elsewhere, Comex silver was 1.20% or 20 cents higher at $16.46 an ounce, while spot platinum was up 0.31% or $2.88 to $921.28 an ounce.