Oil prices climb up in world market

By Azernews

By Nigar Abbasova

World oil prices rose on October 19 supported by a drop in U.S. crude inventories and declining production in China.

International Brent crude futures traded at $52.23 per barrel, recording an increase of 1 percent, while U.S. West Texas Intermediate (WTI) crude oil futures stood at $50.85 per barrel, 1.1 percent up from the last settlement.

The price of a barrel of Azeri Light crude oil increased $0.10 to trade at $52.16 on the world markets.

The rise was mainly triggered by American Petroleum Institute’s (API) weekly crude stocks data that revealed a fall of 3.8 million barrels in U.S. crude stockpiles. The attention is now on the U.S. Energy Information Administration (EIA) official storage data which is to be released in a due course.

Moreover, China, one of the world's top five producers released economic and trade data, which occurred to be supportive for oil prices.

Crude output in the country fell by 9.8 percent to 3.89 million bpd, to near its lowest indices in six years, while economic growth rates was in line with expectations at an annual growth rate of 6.7 percent in the third quarter.

The sharp decline, which followed a record 9.9-percent drop in August, was assessed by traders as an indication that a prolonged efficiency drop by drillers may help to bring a balance back to the oversupplied global market.

Moreover, the prices also stabilized amid hopes that OPEC members will agree to output cuts. Oil was supported by Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), who expressed his confidence about the prospects of a planned production cut.

The focus is still on OPEC’s next meeting in Vienna, where the group is expected to finalize details, deciding on how much each of its 14 members can pump, and convince oil producers outside the group to join the deal.  In its first output cut agreement since 2008, OPEC said it plans to reduce production to 32.50 million to 33.0 million barrels per day (bpd), compared with record output of 33.6 million bpd in September.

Prices initially responded positively to the preliminary consent, doubts about the possibility of the agreement, however, still loom over the market. Moreover, the fact that some countries demand to be treated as an exception is an additional concern for the market.

The recent OPEC data, which revealed fresh production records from the cartel earlier became an additional indication for investors that finalizing cartel’s decision would be difficult.  

Moreover, General Manager at the National Iranian Oil Company (NIOC) Ali Kardor, told Trend that the volume of output in Iran, announced by the cartel, does not correspond to real indices. He said that the real volume is 250 million barrels higher than the volume of 3.65 million barrels per day announced by OPEC, adding that the real volume of oil pumped in September is 3.90 million barrels. He mentioned that the country exports some 2.05-2.1 million barrels a day, while the output is expected to reach 4 million barrels (pre-sanctions level) by March 21.