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Oil prices rise ahead of OPEC output meeting

Oil prices

Singapore:  Oil prices rose in Asia today but gains were capped before a key meeting of the OPEC cartel, which is expected to maintain its current production levels despite an oversupplied global market.

US benchmark West Texas Intermediate for July delivery edged up three cents to USD 58.03 while Brent crude for July gained 13 cents to USD 62.16 in late-morning trade.

“It seems like the same rhetoric will continue (and) OPEC is not going to change their production levels,” Nicholas Teo, market analyst at CMC Markets in Singapore, told AFP.

“This could stoke fears of the oversupply situation in the market and we expect oil prices to pull back slightly.”

Officials from the 12-nation Organization of the Petroleum Exporting Countries in Vienna for a gathering later today on production targets have expressed some frustration with current low prices, but gave no signal they would move to cut output.

At its last meeting in November, the cartel, which pumps around 30 per cent of the world’s oil, kept its official production target of 30 million barrels per day, a move seen as trying drive high-cost US shale oil producers out of the market.

That decision initially contributed to prices slumping to six-year lows in January but some analysts say the strategy, backed by OPEC kingpin Saudi Arabia, has paid off as US shale oil producers have been squeezed and crude has recovered in recent months.

Teo said dealers are also looking ahead to the May US jobs report later today, which analysts expect to show a gain of 225,000 posts.

“We expect payroll numbers to go up, and this will in turn firm up the dollar and subsequently make dollar-priced crude more expensive,” said Teo.

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