OPEC rhetoric has had little market impact with the main market focus still on risks posed by increased US production and the high level of inventories. Oil prices briefly moved higher in US trading on Thursday, but WTI hit selling pressure around the $51.20 p/b area and quickly dipped back below the $51.00 level. Brent also remained under pressure with a dip to test support below the $53.00 level. There were further concerns surrounding the increase in US shale production which will make it more difficult to balance the oil market, especially with increased shipments out of the US. Overall prices dipped to the $50.60 p/b area with little change during Friday’s Asian session as underlying sentiment remained subdued. Russian Energy Minister Novak declined to comment on the potential for extending production cuts, although he also stated that the global market balance has been gradually improving since early March. Risk conditions were relatively steady on Friday while the US currency overall was little changed. Markets overall were looking for evidence that inventories had been drawn down before being more confident surrounding the outlook for prices. June WTI futures held around $50.60 p/b into the US open with Brent drifting just below the $53.00 p/b level as a firmer dollar tone against the Euro and Sterling also limited the potential for price support. OPEC rhetoric will continue to be an important focus in the short term as countries position ahead of the regular meeting in late May, especially as discussions with non-OPEC producers are planned for the same day. There is likely to be significant position adjustment into the weekend and the latest COT data will also be watched closely over the weekend for further insight into underlying positioning.

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