Oil prices record increase

By Azernews

By Nigar Abbasova

World oil prices recorded an increase by over one percent on November 7, supported by OPEC statement, which reaffirmed the commitment to implement the preliminary Algeria deal and cut oil output.

Brent crude futures stood at $46.29 recording an increase of some 71 cents, or 1.56 percent, from the previous close, while U.S. West Texas Intermediate (WTI) crude traded at $44.80 a barrel, 730 cents, or 1.66 percent up from the previous index.

OPEC Secretary-General Mohammed Barkindo said that the group and other major oil producers are “on course” to deliver a deal this month, signaling that the cartel is committed to the Algeria consent.

Moreover, Barkindo stressed that Russia would join an output-curbing deal to help speed up the rebalancing of the oil market, saying that he "heard from the highest quarters in Moscow that Russia is on board”.

Algeria's Energy Minister Nouredine Bouterfa, in turn, said he was confident that OPEC members would stick to a deal made in Algeria, mentioning that there will be “no return on the agreement”.  

Meanwhile, Energy Minister of the United Arab Emirates Suhail al Mazroui said that the global market oil supply glut is nearly gone

“We need to optimize the finding cost and the production cost of every barrel of oil that we produce,” said the minister.

The accord in Algeria helped to push up oil prices to a 15-month high standing above $50 a barrel, but crude has subsequently fallen and the recovery turned to be tentative. The last week losses of the market became the sharpest since January, and took nearly 15 percent off a one-year record high hit in the first half of October.

The High Level Committee of experts will meet again in Vienna on November 25 ahead of the next meeting of OPEC ministers on November 30, where the cartel is expected to finalize the deal. 

Traders however still doubt due to a number of uncertainties and hindrances, including ongoing oversupply in the market, internal disagreements within the cartel and the fact that none of the non-OPEC states has expressed any intention of a cut thus far.

Reuters earlier reported that oil disputes between Saudi Arabia and Iran resurfaced at a meeting of OPEC experts last week, with Riyadh saying it could raise oil output steeply to bring prices down if Tehran refuses to limit its supply. Extra supply would deteriorate the problem of global glut, which has triggered more than a half decrease in crude prices pushing them down from about $115 a barrel since mid-2014.

Barkindo, however, denied Saudi Arabia’s threat to raise output, saying that the position of Saudi Arabia at the meeting was “as usual constructive”. 

However, market watchers say Riyadh may increase its exports even if the country does not follow the threat, as local oil demand is falling and the fact could imply higher exports even maintaining current output level.