Azernews.Az

By Nigar Abbasova

Oil prices fell on September 20 amid an expected increase in U.S. crude oil stocks and comments of Venezuela that the oil market remains oversupplied by 10 percent.

Brent crude, the global benchmark, fell by $0.37 to trade at $45.58 per barrel, while the WTI grade stood at $42.97 recording a decrease of $0.33. The price of a barrel of Azeri Light crude oil increased $0.75 to stand at $47.73 in the world markets. The price of OPEC basket of fourteen crudes stood at $42.09 a barrel on September 19.

Oil prices reacted to comments of Venezuela's Oil Minister Eulogio Del Pino that global production is at 94 million barrels per day, while it is needed to reduce the volume by 9 million barrels per day to sustain the level of consumption.

OPEC members and other oil producers are set to hold an informal gathering in Algeria, while the oil market hopes it could lead to an agreement to freeze production levels. OPEC producers are currently pumping nearly 33.2 million barrels per day.

Analysts, however, remain skeptical of the ability of countries to reach an output freeze deal, as some players of the market seek to reserve a right of production growth.

Libya, for instance, has already said it won’t cut production. The country’s official envoy to OPEC, Mohamed Oun said the country won’t stop increasing output until it reaches 1.6 million bpd -- the level last seen during Gaddafi’s rule, while the current production stands at 300,000 bpd.

"We see no chance of a production freeze agreement materializing. If a deal should materialize it would be a conditional deal where Iran, Libya, Nigeria and Venezuela are allowed to lift their production,” said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB.

Algeria's Energy Minister Noureddine Bouterfa earlier said he was "optimistic" participants would reach consensus on how to prop up the oil market.

Attention of traders is also focused on the American Petroleum Institute’s (API) weekly crude stocks data, which will be released in the short run, while analysts expect that the data will reveal a growth of approximately 2.3 million barrels. Increase in U.S. commercial crude may pave the way for further decrease in oil prices as rise in stocks indicates growing oversupply.

Meanwhile, OPEC Secretary-General Mohammed Barkindo said he is confident the cartel will reach an informal supply agreement, mentioning that currently, some 3 billion barrels of crude oil remain unrealized. He added that an extraordinary meeting of the cartel could happen if the Algeria conference produced a consensus, as Algeria meeting is for consultations and not decision-making.

--

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

Follow us on Twitter @AzerNewsAz