Oil Price Rises To $57 …As OPEC Plans Output Cuts

In addition, the number of rigs operating in USA oil fields fell by four rigs to a total of 744 rigs this week, according to data released by oilfield services firm Baker Hughes on Friday (9/22).

The big unanswered question, though, is whether or not the OPEC/non-OPEC production cuts should be extended. Under the agreement, Oman will cut almost 5 per cent of its production, a reduction of 45,000 barrels per day.

Rising crude oil imports from China also supported Brent crude oil prices.

He said the oil firm had varied interests in seven deepwater concessions and successfully executed a Global Memorandum of Understanding (GMoU) with communities in OMLs 30 and 34, adding that NPDC achieved a major feat by successfully drilling and completing five horizontal wells in nine months in OML 26, leading to production of an additional 7, 000 bpd.

There were no caps imposed on Libya or Nigeria but they pledged to contribute to supply cuts when their production stabilises. Moreover, the investment bank argued that OPEC probably shouldn't extend its production cuts anyway because the group could cede market share to other producers (i.e. USA shale).

Kachikwu noted that even though Nigeria hit 1.802 million barrels per day in the month of August that was not enough justification for a call by some countries for Nigeria to be brought into the fold.

WITH prolonged lull, characterised by over-supply, speculation and politics, the worldwide oil market has been very unstable this year, thus causing tension in major oil-exporting nations, including Nigeria, Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Islamic Republic of Iran, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, United Arab Emirate and Venezuela. "Compliance was at 94% in July".

Oil Price rose on Monday to a nine-month high as Turkey threatened to shut down Kurdish crude exports.

OPEC (Organisation of the Petroleum Exporting Countries) and Russian Federation are cutting output deeper than ever, demand is surprisingly strong and the threat of Middle East disruption looms again. Portfolio managers have also accumulated a record net long position in European gasoil in the expectation that USA diesel exports will be cut in the coming month.

"If we break above $60, I believe that we will hold above it for the rest of the year", Tamas Varga, an analyst at PVM Oil Associates Ltd, said by phone from London.

The 2018 forecast was also revised lower from 9.91 million bpd to 9.84 million bpd. As a result, distillate prices have moved to a significant premium over crude oil to encourage refiners to maximize crude processing and the yield to middle distillates rather than other products such as gasoline. The U.S. government on Wednesday announced a build of 4.6 million barrels for the week ended September 15.

Oil bulls are back in the driving seat with $60 a barrel in sight, but it could be a short ride.

Jeffrey Currie, Goldman Sachs' head of global commodities research, said this was in part due to the ability of US shale producers to raise output despite low prices. "However, there remains another 170 million barrels of stock overhang to be depleted".

The meeting participants expressed satisfaction with the level of implementation of the oil cut deal, while further oil cuts were among the topics of the talks.

As of noon on Monday, Brent crude was trading at $57.57 per barrel, an increase of $1.15 from Friday's trading price of $56.42.

The state-owned company calculates weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude and adjusts fuel prices upward or downward on a weekly basis, depending on the price of global crude.

OPEC's de facto leader Saudi Arabia, however, seems more weakly positioned, because it requires higher oil prices to plug its budget deficit and to obtain a high valuation for Aramco in the IPO planned for next year. That led the IEA to upwardly revise its growth estimate for the full year.

Disruptions to USA refineries caused by Hurricane Harvey have been a big factor in driving the correction in the country's product inventories.

  • Leroy Wright