Oil Steadies Ahead of OPEC Meeting

OPEC expected to keep oil production high, roll over target.

Oil prices steadied on Thursday as a weaker dollar offset worries over a global supply glut ahead of a meeting of OPEC oil producers.

The Organization of the Petroleum Exporting Countries (OPEC) is widely expected on Friday to keep a group output target of 30 million barrels per day (bpd), despite calls from some producers to cut supply to support prices.
             
The cartel is now pumping about 2 million bpd more than needed, analysts say, feeding a glut that has left millions of barrels in storage and kept prices at close to half their peak levels last year.

Brent for July was up 25 cents at $64.05 a barrel by 1035 GMT. U.S. crude futures were 20 cents higher at $59.85.

The dollar was down 0.7 percent against a basket of currencies, making oil cheaper for non-dollar investors, as the euro surged on German Bund yields.
 

The stronger euro is now supporting oil prices," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Energy analysts at Morgan Stanley (MS) echoed the views of many analysts, saying OPEC members were unlikely to make any market-moving decisions.

"The recent rise in volatility should fade after the meeting and some relief rally is not out of the question," they said in a report.

IHS Energy also said it expected no reversal of OPEC's policy of keeping production high in defence of market share, instead of cutting output to support prices.

"Although surprises from OPEC can never be ruled out, prospects for a policy reversal at this time range from slim to non-existent. Saudi Arabia and its Gulf allies, which last November instigated the policy of defending market share instead of prices, appear resolved to persist with it," said Bhushan Bahree, senior director at IHS Energy.

Strong global fuel demand has helped support oil prices despite the glut. In China, almost 2 million new cars are sold every month despite its economic slowdown.

Demand is also strong in Europe. Goldman Sachs said Europe's high diesel consumption was a risk to the bank's bearish Brent outlook of $58 per barrel for 2015 and $62 for next year.

European diesel demand growth reached 7.2 percent in the first quarter, or 420,000 bpd, compared with a year before, close to the highest rate seen in the past 30 years, Goldman said.
 

By Karolin Schaps