Oil prices rose above $68 a barrel today with investors perched on the fence ahead of an OPEC meeting tomorrow, which analysts believe may see more rhetoric on compliance but no change in output targets.
The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna tomorrow, with most analysts expecting the producer group, the source of more than a third of the world's oil supply, to maintain its official output target stable around $70.
"The market is looking for reasons to sell oil, and after the OPEC meeting might be a decent excuse. People are worried by under-compliance, the disappointing US driving season, anaemic demand and high stock levels," ANZ's senior commodities analyst Mark Pervan said.
"That's not a positive scenario for oil and near term, investors will want to take a lighter position. Direction after that will continue to come from equities."
NYMEX crude for October delivery stood at $68.33 a barrel by 4.40am, up 31 cents from Friday's close. There was no settlement price on Monday because NYMEX was closed for the US Labor Day holiday.
London Brent crude rose 44 cents to $66.97 a barrel.
Crude prices, although up 50 per cent so far this year, are still less than half their peak struck in July 2008, and consumers and producers are happy with that, Saudi Arabia's oil minister Ali al-Naimi said today.
Mr Naimi described the oil market as "steady and in good shape," although when asked if oil inventories were too high, said "Yes, they are a little bit."
But compliance with output targets remains an issue, a trader in Singapore noted, adding that the organisation could step up calls to heed quotas from its more wayward members. "Compliance, or rather the lack of it, is a problem for OPEC.
They need to bring some of the over-producers back in line and that's what this meeting will be about," ANZ's Pervan said.
He added: "Compliance is pretty lax. They will push for a much greater degree. It really needs to rise from mid-70 per cent to a high 80 per cent. Russia tweaking up output is probably not helping prices either."
Reuters