Oil prices in mixed territory amid OPEC waiting game

Sept. 22 (UPI) -- Crude oil prices were in mixed territory early Friday as traders waited to see what would happen with a committee monitoring OPEC's market balancing act.

Members of a committee monitoring a multilateral effort to draw the level of global crude oil inventories closer to the five-year average met in Vienna to consider its impacts. The agreement, enacted in January, was extended already once this year into March.

The effort, which includes producers outside the Organization of Petroleum Exporting Countries, is up against internal pressures from Libya and Nigeria, which are both exempt so they can steer oil revenue toward national security efforts. Libyan production has moved in fits and starts for most of the year, but is generally much higher than in 2016. Nigeria, meanwhile, has shown signs of stability and Russia, a party to the monitoring committee, said the exempt status was under review.

Stephen Brennock with London oil broker PVM said in an emailed market report that recent support for crude oil prices came from the general belief the agreement will be extended, "if not at today's ministerial meeting then probably at the next ordinary meeting in Vienna on November 30."

Oil prices were mixed, however, amid the wait-and-see scenario that was apparent as the meeting in Vienna played out. The price for Brent crude oil was up 0.28 percent as of 9:12 a.m. EDT to $56.59 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was more or less unchanged from the previous close at $50.50 per barrel.

The U.S. benchmark for the price of oil may still be undervalued because of the lingering impact from Hurricane Harvey, which hit the heart of the U.S. refinery sector in late August and locked oil in storage. The opposite may be true for Brent, which has shown strong demand because of the U.S. disruptions.

Industry leaders and market analysts have been warning the market may be overheating because dynamics were upended by the hurricanes that hit the United States in recent weeks. Vandana Hari, an industry analyst and founder of Vanda Insights, said in an emailed newsletter the rally, for Brent at least, may be running out of steam.

"Brent bulls may have been eying the oil market through rose-tinted glasses," she said. "But is it ready for a marathon?"

Markets in general may have an added risk premium on Friday given the tit-for-tat exchanges between U.S. President Donald Trump and North Korean Leader Kim Jong Un. Kim said Friday the U.S. president was "mentally deranged" and hinted at further military action in the region. That followed Trump's threat before the United Nations to "totally destroy" North Korea if Pyongyang attacked a U.S. ally.