Oil prices up in world market

By Azernews

By Nigar Abbasova

Crude prices continue to show positive dynamics in the world markets amid the expectations that oil producers will take measures to fix up balance of demand and supply.   

Global benchmark Brent crude oil October futures were trading at $47.26 per barrel facing an increase by 0.62 percent, on August 15. West Texas Intermediate (WTI) crude September futures stood at $44.85 per barrel, recording an increase of 0.81 percent, Ria Novosti reported.

The weekly basket price of OPEC basket of fourteen crudes stood at $40.84 a barrel on August 12.

The  increase was triggered by the comments from Saudi oil minister Khalid al-Falih about possible participation of the country in the  coordinated actions of OPEC and main exporters to stabilize the market, as well as forecast of the International Energy Agency on the possible tightening in the oil market in the second half of 2016.

The minister said OPEC members and non-OPEC members would discuss the market situation, including any action that may be required to stabilize prices, during an informal meeting scheduled for September 26-28 in Algeria.

In tote, oil prices have risen by more than 10 percent since early August. Moreover, market participants have ignored data of Baker Hughes, an American oilfield service company, on the significant growth of the number of rigs in the USA.  The company said the number of rigs in the country increased by 17 units, which made 3.94 percent and stood at 481 units as of August 12.

"Oil posted another gain as speculation of potential production freezes by OPEC picked up pace. Saudi Arabia signaled that it is prepared to discuss stabilizing the markets at informal OPEC discussions next month and this was despite another strong rise in drilling activity in the U.S, CNBC reported citing ANZ bank.

Meanwhile, Russian Energy Minister, Alexander Novak told Asharq Al-Awsat agency, that Russia is ready to continue its dialogue with OPEC countries on the stabilization of oil prices, TASS reported.  

 He didn’t exclude the possibility of Russian participation in the talks on the limitation of oil extraction. He also mentioned that the oil price is not expected to reach the level of $100 per barrel in the nearest future, adding that the balance in the market may be reached in 2017.

Nevertheless, some traders remain skeptical of the outcome, expecting a repeat of the April summit in Doha, where the world's largest oil producing countries failed to clinch a deal on freezing output and boosting crude prices.

Oversupply resulted in the sharp decrease of oil prices sending them from $115 per barrel in 2014 to as down as $27 in January 2016, which is considered to be the weakest price since 2003. Nevertheless, the prices recovered and averaged $50 but then fell again towards $40 in July.

Global demand growth is expected to decline from 1.4 million barrels per day in 2016 to 1.2 million billion barrels in 2017, according to IEA. The forecast for 2017 was cut by 0.1 million barrels per day from last month's report, while the 2016 outlook is unchanged from the last month’s report of IEA.