The Organization of the Petroleum Exporting Countries (OPEC) failed to agree to a clear oil-output strategy on Thursday as Iran insisted on raising production to regain market share lost during years of sanctions, which were lifted in January.
Analysts still took away positives from the meeting in Vienna, as Saudi Arabia showed restraint.
“We will be very gentle in our approach and make sure we don’t shock the market in any way,” Saudi Energy Minister Khalid al-Falih told reporters.
As a result, Brent crude futures held above $50 per barrel on Friday, trading at $50.19 per barrel at 0647 GMT, up 15 cents from the last settlement and almost double January lows.
U.S. West Texas Intermediate (WTI) crude futures were trading up 9 cents at $49.26.
Despite the failure to agree on a joint policy, analysts said that rivals Iran and Saudi Arabia both got what they wanted from the meeting.
“Both sides have achieved their underlying aims; Iran’s production remains unconstrained and Saudis policy of allowing the market to rebalance through price is still in place. Non-OPEC supply has fallen and OPEC has gained market share,” BNP Paribas said.
Given that Iran’s facilities cannot increase exports by much more and that Saudi Arabia pledged restraint just as supplies are disrupted elsewhere – especially in Nigeria, Venezuela, Libya and the United States – traders said that the OPEC meeting was supportive of oil prices.
“The rate of global stock build has fallen and the elevated stocks will begin to erode from the start of 2017, providing scope for price improvement,” the bank said.
Bank of America Merrill Lynch said that rising oil prices were also being “exacerbated by seasonal dynamics, as well as robust trend gasoline consumption growth in the U.S., India, and even China.”
The U.S. bank said that “fueled by the lower prices, oil consumption around the world is booming on less efficient use, less substitution effects, and more economic demand.”
Strong demand in Asia was also reflected by a jump in refining margins especially for diesel and jet fuel.
For diesel, traders said a record heat-wave in south and southeast Asia had pushed up fuel demand to operate air conditioners, while jet fuel demand was soaring because of Asia’s booming air travel.
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