Oil prices continue to rise

/By Azernews/

By Rashid Shirinov

World oil prices have continued their primarily permanent rise over the last three days. On July 14 prices showed a positive trend, adjusting up after falling more than 5 percent the previous. The reason of the increase became the data of U.S. Department of Energy about the great growth of gasoline and distillates stocks.

For 12.54 pm (GMT) of today, the price of September contracts for North sea petroleum mix of Brent crude oil rose by 0.56 percent to $46.52 a barrel, while WTI’s August contracts’ prices increased by 0.6 percent, to $45.02 a barrel. Bernstein analysts expect the stabilization of the oil market at $60 a barrel by the end of the year.

In the meantime, the price of a barrel of Azeri Light crude oil rose by $1.4 to stand at $48.64 on July 13.

Meawhile, the cost of OPEC oil basket on July 14 amounted to $43.19 per barrel, making a slight decrease of $0.03 as compared to July 12.

The price of OPEC oil basket is determined on the basis of Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Rabi Light (Gabon), Minas (Indonesia), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela) prices.

Production of oil and other liquid hydrocarbons in OPEC countries will continue to grow reaching 39.38 million barrels a day in 2016 and 40.22 million for 2017, the Energy Information Administration of the U.S. Department of Energy predicts.

Overall, oil production from the Middle East has climbed to a record while U.S. faces slumps for the past one year, the IEA noted, mentioning OPEC’s successful strategy of defending market share being implemented since the fall of 2014.

Middle Eastern countries produce over 31 million barrels a day for a third month in June amid near-record supply of Saudi Arabia. Production from the OPEC climbed to an eight-year high last month. That is also linked to Iran which continued its export recovery because the end of international sanctions in January.

However, not all OPEC member-states have increased oil production -- Venezuela’s crude production dropped to a 13-year low of 2.18 million barrels a day last month as an economic crisis triggered by the oil-price decline deteriorated the country’s petroleum industry.

According to the U.S. Department of Energy, commercial oil reserves in the country for July 1-8 declined by 2.5 million barrels (0.5 percent) to 521.8 million barrels, although projections stated it to be less by 0.35 million barrels (521.45 million). Overall, oil production in the United States for last week increased by 0.67 percent (57,000 barrels per day) — up to 8,485 million bpd.

In turn, the oil reserves in the country's largest Cushing terminal fell by 0.2 million barrels to 63.9 million. Despite the predictions on a 0.432 million barrels decline, the gasoline inventories of the U.S. increased by 1.2 million barrels to 240.1 million.

Distillate stocks also exceeded expectations, rising by 4.1 million barrels, or 2.7 percent, to 153 million barrels.

This report reinforced the negative sentiment in the oil market caused by the International Energy Agency (IEA). The organization claimed the world's oil reserves continued its growth last month.

“We know that the process of restoring balance on the market is currently going on, but pressure on oil prices persists. The market has already seen rapid price increases to the level of $50 per barrel, so it is possible that we will see the same rapid drop to a level below $40,” Avtar Sandu, Singaporean senior Manager of Phillip Futures told Reuters.