The Organization of the Petroleum Exporting
Countries (OPEC) agreed Friday to ease crude output limits, paving the way for
fresh crude supply to enter the market, at a meeting in Vienna together with
non-OPEC oil producers to discuss output policy. OPEC agreed for a modest
increase in oil production by about 1 million barrels per day from July after
its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from
major consumers to help reduce the price of crude and avoid a supply shortage.
The smaller-than-expected increase agreed
upon by major oil exporters also renewed investor optimism. On the New
York Mercantile Exchange crude futures for August delivery rose 4.6% to settle
at $68.58 a barrel, while on London's Intercontinental Exchange, Brent climbed
3.4% to trade at $75.55 a barrel.
The United States, China and India had urged
OPEC to release more supply to prevent an oil deficit that would hurt the
global economy. Saudi Arabia and Russia want to raise output, but some other
OPEC members, including Iran, have opposed this. Falling production in
Venezuela and Libya, as well as the risk of lower output from Iran as a result
of US sanctions, have all increased market worries of a supply shortage.
Another big uncertainty for oil is the
escalating dispute between the United States and China. If a 25% duty on US
crude imports is implemented by Beijing, American oil would become
uncompetitive in China, forcing it to seek buyers elsewhere. If China's import
demand dries up, more than 300,000 bpd of US crude will have to find a new
destination.
OPEC may meet again in September.
The benchmark RSS4 grade rubber closed at `.126
a kg at Kottayam, while RSS3 grade closed at `.105.44 a kg at
Bangkok and Malaysian SMR20 closed at `.92.10 a kg. On
National Multi Commodity Exchange July 2018, the futures closed at `.126.34
a kg, August at `.127.23 a kg and September closed at `.126.34
a kg. Tokyo Commodity Exchange June 2018 futures series closed at ¥160 a kg, July
at ¥166, August at ¥167.2, September at ¥168.7, October at ¥172 and the
contract for delivery in November closed at ¥173.4 a kg.
