Proactiveinvestors
Oil firms in early trading after OPEC leaves production quotas unchanged
Oil prices climbed today after OPEC (Organization of Petroleum Exporting Countries) expectedly left its production quotas unchanged, expecting a healthy demand this year while crude prices are steady at slightly above US$80/barrel, which is believed to be a comfortable level for the organization.
Last week, both OPEC and EIA (Energy Information Administration) upped their respective crude demand forecasts for this year by 0.9 mmbbls/d (million barrels per day) to 85.24 mmbbls/d and by 1.6 mmbbls/d to 86.6 mmbbls/d.
Crude also benefitted from a weaker US dollar, which declined after the Federal Reserve left the interest rates at the current ultra low levels of 0% to 0.25%. The Fed said that the strength of the ongoing economic recovery did not warrant a rate increase, while inflation was likely to stay at a low level and the job market was slow to recover.
This was in line with the Fed’s repeated pledge to keep the rates exceptionally low for an extended period of time.
A stronger American currency makes dollar-denominated commodities such as crude more expensive for holders of other currencies, curbing demand and pushing down the prices.
May Brent Crude improved to US$81.46/barrel, while US light, sweet crude rose to US$82.17/barrel.
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