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Oil prices jump supported by API data

5 October 2016 15:01 (UTC+04:00)
Oil prices jump supported by API data

By Nigar Abbasova

World oil prices recorded a growth on October 5, supported by a surprising drop in the U.S. black gold reserves for a fifth straight week.

Benchmark Brent crude futures were trading at $51.29 per barrel, recording an increase of 0.8 percent, while U.S. West Texas Intermediate (WTI) futures were trading at $49.14 per barrel, 0.9 percent up from their last settlement.

The price of a barrel of Azeri Light crude oil increased $0.93 to stand at $51.27 on the world markets.

The price of OPEC basket of fourteen crudes stood at $46.70 a barrel on October 4.

Positive dynamics in prices is largely a result of American Petroleum Institute’s (API) weekly crude stocks data, which revealed an unexpected fall of 7.6 million barrels. Eyes are now turned to the U.S. government's Energy Information Administration (EIA) data, which will reveal official stockpile figures, while forecasted indices stand at a fall of 2.6 million barrels for the week that ended on September 30.

The recently reached OPEC’s preliminary deal to curb oil production in an effort to reduce a global glut is still in focus of traders.

Venezuela's Oil Minister Eulogio Del Pino said that the agreement between oil producers will allow to increase prices by $10-15, mentioning that OPEC countries may reduce their output by 0.7 million barrels.

Moreover, the further action of non-OPEC states is also essential for the market, as drop of supply by 0.5 million barrels is expected to be reached by means of output reductions in the countries outside the group.

Del Pino said that the talks are currently underway with Oman, Russia and Azerbaijan, adding that the consensus with the three major oil producers, who are not cartel members, would be an historic event.

The consensus, reached in Algeria, however, has not earlier brought the expected balance to the market, as doubtful traders, focused on the lack of hard facts about the deal, say that the agreement will lead to only a modest price increase due to rivalries within the group.

Moreover, the situation in Nigeria and Libya is considered to be the most acute uncertainty in the market, while increase of production in any of the countries would necessitate sharp reductions in remaining OPEC states.

The Algeria meeting provided certain exceptions for such countries as Iran, Libya and Nigeria, allowing them to produce "at maximum levels that make sense".

Meanwhile, head of Libya’s state-run National Oil Corporation (NOC) Ibrahim Al-Awami said that the output of the country increased by 500,000 barrels a day, while it is expected to increase up to 600,000 barrels per day in the month to come. The volume of production in Libya currently stands at 485,000 barrels of oil per day.

Managing Director of National Iranian Oil Company Ali Kardor earlier told IRNA that the country had already reached the level of 4 million barrels per day, adding that Iran's crude oil production capacity must reach 5.2 to 5.7 million bpd in the future.

Analysts will now keep an eye on OPEC's formal meeting scheduled for November 30 in Vienna, as how much each country will produce is to be decided at this meeting, while an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

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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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