Oil prices resume gains in world market

By Azernews

By Nigar Abbasova

World oil prices resumed positive dynamics on September 14, influenced by American Petroleum Institute’s (API) data on the smaller-than-expected U.S. crude oil stockpiles.

International benchmark Brent crude futures were trading at $47.39 per barrel, 0.6 percent up from its previous close, while U.S. West Texas Intermediate (WTI) crude futures stood at $45.28 a barrel, recording an increase  of 0.9 percent, CNBC reported.

The price of a barrel of Azeri Light crude oil decreased $1.45 to stand at $47.78 on the world markets.

 API’s data revealed a crude reserves increase of 1.4 million barrels for the week, which ended on September 9, while analysts expected a rise of 3.8 million barrels. The attention of traders is now focused on the official statistics, which will be provided by the U.S. Department of Energy (DOE) in the short run.

Oversupply, which resulted in the sharp decrease of oil prices sending them from $115 per barrel in 2014 to as down as $27 in January 2016 still remains one of the most concerning issues in the black gold market.  

The situation is also under the influence of EIA’s announcement that slowing oil demand amid growing supplies could signal that the market would be oversupplied at least through the first half of 2017.

Analysts say that gains in crude prices may be soon stopped by rising crude exports from Libya, where production could be raised to 600,000 barrels a day from about 290,000 barrels a day within a month, further troubling the reach of balance in the market and triggering the global crude supply glut.

Moreover, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast of oil supplies from non-member countries in 2017. Non-OPEC supply is now expected to rise by 200,000 barrels per day (bpd) in 2017, versus a previously forecasted 150,000 bpd decline, while demand for crude is forecasted to average 32.48 million bpd, which is down 530,000 bpd from the previous forecast. The revision is mostly due to start up of Kazakhstan's Kashagan oilfield.

The cartel expects Azerbaijan’s oil supply to average 0.87 million barrels per day in 2016.

Meanwhile, the upcoming Algeria meeting, which will be focused on the issue of output freeze, still remains one of the most influential topics in the oil market, while main question is whether closure of the deal will be possible, taking into account the fact that some players of the market seek to reserve a right of production growth.