NYMEX crude gains in Asia with all eyes on OPEC

Investing.com - Crude oil prices rebounded slightly in early Asia on Thursday with investors geared up for any chan ge in tone from an OPEC meeting on the prospect of production levels.

On the New York Mercantile Exchange, WTI crude for July delivery plummeted more than 2.75% to an intraday low of $59.39 a barrel, before rallying slightly to 59.66, down 1.60 or 2.61%.

Overnight, crude futures plunged on Wednesday reversing gains from one session earlier, as investors locked into profits amid dwindling U.S. stockpiles.

WTI crude continued on a volatile path of unpredictability, moving in a positive or negative direction of more than 1.75% for the fourth time in seven sessions. Since the beginning of May, U.S. crude futures have fluctuated by more 1% on 14 different sessions.

Texas Long Sweet futures fell sharply after the Energy Information Administration released its weekly Petroleum Status Report in U.S. morning trading. Last week, U.S. crude inventories for the week ending May 29 decreased by 1.9 million barrels, in line with forecasts of a 2.0 million draw. U.S. crude stockpiles still remain at 477.4 million barrels, its highest level at this time of year in at least 80 years.

In terms of production, U.S. crude output remained over 9.5 million bpd for the second straight week. Last week, production soared to 9.566 million bpd up from a total of 9.262 for the week ending May 15.

Crude oil refinery inputs, meanwhile, averaged 16.4 million bpd last week, a drop of 43,000 bpd in comparison with the previous week. Last week, refineries nationwide operated at 93.2% of their operable capacity. The figure is being closely watched by analysts following the official start of the summer driving season on Memorial Day Weekend.

On the Intercontinental Exchange (ICE), Brent crude for July delivery dipped more than 2.5% to an intraday low of $63.51, before rising to 63.85 at the close, down 1.64 or 2.50% on Wednesday.

Energy traders await a critical OPEC meeting on Friday in Vienna for further indications on global supply levels. OPEC is widely expected to keep its production ceiling above 30 million bpd at Friday's meeting. Upon his arrival in Vienna earlier this week, Saudi Arabia oil minister Ali al-Naimi appeared content with the current balance between supply and demand on global markets.

“Demand is picking up. Good! Supply is slowing, right? That is a fact,” Al-Naimi told reporters.

Al-Naimi avoided making any definitive predictions on the price of crude at year's end. Crude futures are down more than 40% after peaking around $115 last summer, but are up significantly after crashing to around $45 in January.

“I don’t have a crystal ball but it is (going) in the right direction,” Al-Naimi added.

OPEC may also devise a strategy on how to handle Iranian exports if economic sanctions against the Gulf state are lifted later this summer. Iranian exports could increase to 1.7 million bpd from a current level 1.0 million within 12 months of a potential nuclear deal with Western powers, according to Facts Global Energy an energy consulting firm. Iran reportedly has 30 million barrels of crude stored in offshore tankers ready for export.