The Organization of the Petroleum Exporting Countries extended a 2016 agreement which calls on most of its members and several non-members to collectively lower their oil output to help support oil prices.
One week later, the price of oil is flirting with a multiweek low — causing some analysts and traders to question how effective OPEC is in supporting oil prices. The price of both Brent crude and U.S. light crude both hit a three-week low on Wednesday, according to a Libya, an OPEC member that's exempt from the agreement, helped boost OPEC's crude output in May, as its production reached 800,000 barrels per day, up from 300,000 per day last year.
"Sentiment is very poor and yesterday's survey from Reuters regarding OPEC production in May added to the skepticism about OPEC's capability to rebalance the market as quickly as hoped for," Carsten Fritsch, a commodity analyst at Commerzbank, told Reuters.
Meanwhile, all eyes will be glued to Thursday's U.S. Energy Information Administration report on stockpile futures.
Abhishek Deshpande, Natixis SA's chief energy analyst, told Bloomberg that any impact on U.S. crude stockpiles will be "extrapolated globally."
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