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Maduro plans to bring together heads of OPEC, non-OPEC states to fix prices

19 January 2017 15:15 (UTC+04:00)
Maduro plans to bring together heads of OPEC, non-OPEC states to fix prices

By Nigar Abbasova

The oil market's attention is focused overwhelmingly on figuring out how producers are going to follow the production cut deal reached in late 2016. Sentiment in the market has been torn between expectations of a rebound in US shale production and hopes that oversupply may be curbed by the output cuts by OPEC and non-OPEC states.

Brent futures rose 46 cents or 0.9 percent and stood at $54.37 a barrel on January 19, while U.S. crude West Texas Intermediate (WTI) moved away from its one-week lows touched the session before and stood at $51.48 per barrel, recording an increase of 40 cents, Reuters reported. The price of a barrel of Azeri Light crude oil decreased $0.65 to stand at $55.64.

OPEC and several independent producers agreed last year to cut supply, the first such deal in 15 years, as of January 1, 2017 to remove a glut. The effort has helped oil prices to rise to $55 a barrel, from a 12-year low near $27 a year ago.

Venezuelan President Nicolas Maduro recently announced that the meeting between OPEC and non-OPEC states will be held in the short run. “We want to hold the meeting as soon as possible, and I hope that we will announce the exact date and venue soon,” Ria Novosti quoted him as saying on January 18.

Meanwhile, OPEC January 2017 Oil Market Report became the major data that grabbed the headlines of the oil market this week.

The Cartel signaled a falling oil supply surplus in 2017 as the exporter group's output slips from a record high ahead of a deal to cut supply and outside producers show positive initial signs of complying with the accord.

With demand for OPEC crude in 2017 expected to average 32.10 million bpd, the report indicated there would be an average surplus of 985,000 bpd if OPEC keeps output steady.

Non-OPEC oil supply is now projected to grow by 0.12 mbd, down by 0.18 mbd from the December report due to lower expectations for Russia, Kazakhstan, China, Congo and Norway.

Oil supply from Azerbaijan was revised down by 10,000 barrels per day to average 0.86 million barrels per day, indicating stagnant output in 2016.

However, the monthly report also pointed to the possibly of a rebound in U.S. output, as higher oil prices following supply cuts by other producers support increased shale drilling. Market watchdogs expect a renewed jump in U.S. supply triggered by voluntary cuts elsewhere to crash efforts to boost oil prices.

The Energy Information Administration (EIA) projected oil production in the biggest U.S. shale fields would rise by 40,750 barrels per day (bpd) to 4.748 million bpd in February.

Also, the dollar, which influences moves in greenback-priced commodities, inched up against the yen and kept broad gains against other major peers, mainly influenced by comments of Federal Reserve Chair Janet Yellen suggesting U.S interest rates could be raised quickly this year.

The Fed chief said the central bank may lift its key benchmark short-term rate "a few times a year" through 2019, reaching a sustainable rate of 3 percent in the long-term perspective, while the pace could change depending on how the outlook for the economy develops.

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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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