OPEC leaves production target unchanged at 30 million barrels per day

Brent ultimately closed trading on Friday up 2% at a good $63 per barrel following some very volatile trading. As expected, OPEC left its production target unchanged at 30 million barrels per day. However, because some market participants had speculated ahead of the meeting that the production target might be raised, prices rose in response. 

Shortly afterwards, robust US labour market data drove up the US dollar, causing Brent to fall for a time to a seven-week low of just shy of $61 per barrel before a significant price recovery began in the late course of trading, notes Commerzbank. This was supported by a renewed decline in the oil rig count in the US, despite the reduction being small with only four oil rigs shut down. What is doubtless more important, however, is that the solid job creation rate in the US considerably improves the demand outlook in what is the world's largest oil consumer country. 

Increased oil demand in the US would help to reduce the oversupply on the oil market. That said, this is offset by the fact that oil demand in China - the second-largest consumer country - appears to be faltering. Chinese crude oil imports in May slumped by nearly 26% month-on-month to 5.47 million barrels per day added Commerzbank. Admittedly, part of the decline can be explained by the very high previous month's figure, which constituted a record level. All the same, a year-on-year comparison also reveals an 11% decrease. What is more, crude oil imports have plunged to a 19-month low. Presumably refineries resorted to using stocks, meaning that actual oil demand in May was higher than the import figures suggest.