Crude prices rise on strong demand in Asia
By Nigar Abbasova
Crude prices jumped on October 27 amid the strong demand in Asia, despite the fact that doubts over OPEC's ability to effectively organize a coordinated production cut to stabilize the black gold market still weighed on the energy markets.
International Brent crude oil futures were trading at $50.18 per barrel, while WTI futures stood at $49.33 per barrel, recording an increase of 0.31 percent compared to the previous settlement.
Concerns over political stability in Venezuela, which is a major oil producer, gave the main trigger for the lift in the market, while another supportive sign for the price is the increase of refining activity in Asia. As crude is the main feedstock for oil refineries, strong refining activity is likely to increase the demand.
But, some analysts say the oil prices will not rise due to
doubts that the Organization of the Petroleum Exporting Countries
(OPEC) and non-OPEC producers like Russia will be able to
effectively coordinate curbs in output to prop up prices.
The skepticism about the possibility of OPEC deal is triggered by a
number of uncertainties, including non-definite position of certain
countries, willingness of a number of countries to be treated as an
exception, as well as some player’s plans to pump at high
levels.
A cut is being pushed by Saudi Arabia, OPEC's biggest producer, and it is being supported – by Russia, not a member of the cartel but the world's biggest oil producer, and Venezuela, which tries to persuade the non-cartel members to cut the production.
The launch of production in Kazakhstan’s Kashagan field, which is viewed as one of the largest oil discoveries of the past 40 years, is also among the issues that raise concerns in the black gold market. Kashagan is expected to increase oil production in Kazakhstan, but it is considered to be a negative factor for the global oil market which suffers from oil glut. The country expects to get the volume of oil ranging from 500.000 to 1 million tons from Kashagan by late 2016.
Energy Minister of Kazakhstan Kanat Bozumbayev said that the volume of production may reach the level ranging from 4 to 7 million tons, mentioning that all will depend on the operation of drills and equipment.
OPEC plans to cut output are not on the agenda of Kazakhstan. However, the country will participate in the OPEC meeting, while an officer of the Energy Ministry will represent Kazakhstan at the upcoming OPEC meeting.
Azerbaijan has also confirmed its participation in the meeting, scheduled for late October saying that Energy Minister Natig Aliyev will represent the country at the meeting. The country has already expressed its position on the issue, announcing that it will not unilaterally increase oil production, even without waiting for decisions of OPEC member countries.
The cartel earlier sent invitation for participation in the technical meeting to 12 non-cartel states, including Russia, Azerbaijan, Kazakhstan, Oman, Egypt, Bahrain, Colombia, Mexico, Trinidad and Tobago, Bolivia, Norway and Canada.
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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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