Oil prices flat ahead of OPEC meeting

 02 Jun 2016 - 10:27

Oil prices flat ahead of OPEC meeting

Singapore: Oil prices were flat in early Asian trading Thursday as investors awaited the outcome of an OPEC meeting later in the day in Vienna.

Traditionally the Organization of the Petroleum Exporting Countries, which pumps around a third of the world's oil, has cut production to boost prices.

But few people are expecting an agreement to cap production, with Iran already declaring it is unwilling to take part in any such a deal at the talks.

Iranian Oil Minister Bijan Zanganeh on Wednesday rejected suggestions OPEC would agree on a general cap in the Austrian capital, saying his country backed a return to a national quota system.

"One of our main ideas is to have country quotas, but I don't think we can reach an agreement on this subject at this meeting," the minister said as he arrived.

At about 0700 GMT, US benchmark West Texas Intermediate (WTI), for delivery in July, was down 10 cents at $48.91 a barrel. Brent North Sea crude for August was up one cent at $49.73.

BMI Research oil and gas analyst Peter Lee told AFP that prices did not move drastically owing to cautiousness.

Lee added that Iran's opposition to any attempt to limit output to support weak crude prices has not surprised traders.

"Iran's been consistent in their actions, so the market is pretty much priced-in here," he added.

Iran stayed away from a disastrous meeting in Doha on April 17 between OPEC and other major producers, including Russia, that failed to agree a coordinated output freeze.

Zanganeh said Wednesday that a production cap would be "no benefit" for Iran, which only returned to world oil markets after international sanctions linked to its nuclear programme were lifted in January.

IG Markets' Bernard Aw noted that the lack of cooperation between OPEC members "has rendered the cartel somewhat ineffective".

"Oil prices are still hovering near the $50 mark, and whether it will convincingly break above this level depends on how the OPEC meeting turns out," he said in a note to investors.

Crude prices briefly topped $50 last week for the first time this year as short-term production disruptions in Canada and Nigeria eased concerns about abundant global supplies, but they remain less than half of their 2014 peaks.