World Oil Price Varies Ahead of OPEC Meeting

Gladys Abbott
September 24, 2017

Russian energy minister Alexander Novak said on Friday that Opec and the other producers needed to continue co-ordinated action and work on a strategy from April 2018.

Exports of refined products (gasoline, diesel fuel, etc.) rose to almost 4.5 million barrels a day last week.

The front-month in US crude's West Texas Intermediate (WTI) futures settled up $0.93, or 1.9%, at $50.41 a barrel on the New York Mercantile Exchange. Prices advanced 5.1% last week, the biggest weekly gain since July.

He added, "I don't think it's a sure thing they extend the deal at this meeting anyway", in reference to attention paid of late to the prospect that the cartel will extend its oil reduction initiative beyond the expiry date of March 2018. There was a rise in crude inventories this week but the market is looking to longer term fundamentals in the hope of a re-balance.

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014.

Asked when Nigeria was willing to join the supply limiting deal, the minister said the country already had, in effect. This, he said, "is supporting Brent and in turn is supporting US products and WTI as well". "Part of the reason for that has been the relentless trend of rising USA production in 2017, that even in spite of the adverse impacts of Hurricane Harvey, still remains near a multiyear high".

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Nine months into the supply agreement led by members of the Organisation of Petroleum Exporting Countries, implementation of the pledged production cuts remains high.

Oil prices had earlier fallen by more than 50 per cent in less than two years due to a supply glut, from levels of over $120 a barrel.

Another surprise to the USA market was the decline in working oil rigs, according to the Baker Hughes index.

The Minister of State for Petroleum Resources, Ibe Kachikwu, told the meeting that even though Nigeria hit 1.802 million barrels per day in August 2017, that was not enough justification for a call by some countries for it to be brought into the fold. "There is at least a possibility of going back to the situation we had 10 years ago where oil prices were very, very high at a time when demand was growing".

Meanwhile, November Brent crude LCOX7, +0.18% the global benchmark, edged up by 6 cents, or 0.1%, to $56.49 a barrel on the ICE Futures Europe exchange.

The spread "could stretch a bit further" but US refinery restarts and growing USA exports should eventually lift WTI prices and narrow the spread, Ritterbusch said.

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