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Oil prices edge up on world market

18 January 2017 14:43 (UTC+04:00)
Oil prices edge up on world market

By Nigar Abbasova

The energy market is still highly volatile with prices fluctuating daily on background of supportive and destructive expectations.

Oil prices turned to positive dynamics on January 18, receiving support from Saudi Aramco Company and a weaker dollar, although gains were limited by expected boost in U.S. output.

Brent crude futures were up 23 cents to stand at $55.70 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were trading at $52.70 per barrel recording an increase of 22 cents, Reuters reported.

Prices drew strong support from remarks made by the chief executive officer of the Saudi Arabian Oil Company (Saudi Aramco), Amin Nasser, about the oil market and strict adherence of the Kingdom to its reduction commitments.

Addressing the World Economic Forum in Davos, Nasser said that OPEC’s oil output deal should hopefully see the market balance by the end of the first half of 2017.

Also, the U.S. dollar fell to a near six-week low against a basket of currencies, following comments of U.S. President-elect Donald Trump.

Trump described the greenback as “too strong” and “hurting U.S. competitiveness” signaling the end for a two-decade policy of publicly favoring a strong currency. A weaker dollar made dollar-denominated crude less expensive for users of other currencies, potentially spurring fuel demand.

The data that caps enthusiasm about the possibility of rebalancing are expectations on rising U.S. production numbers. The U.S. government earlier said the production is set to rise towards 9 million barrels per day, putting downward pressures on prices.

Most watchdogs say that higher prices trigger increase in U.S. production setting the stage for greater oil-price volatility. Oil increased more than 20 percent since the cartel decided to cut production to boost prices, but it also increased productivity of shale drillers, making them more flexible, efficient and able to response quickly to lower costs.

Production in the U.S. increased by nearly 460,000 barrels a day, or 5.4 percent, in the past six months after falling by almost 600,000 barrels in the first half of last year.

The Energy Information Administration (EIA) earlier raised its domestic output forecast for 2017 up to 9 million barrels a day from 8.78 million projected in December. Besides, oil demand is expected to grow at a slower pace in the future, according to the agency.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz

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