Oil prices see rise once again

By Azernews

By Nigar Abbasova

World oil prices restored a growth on October 12, supported by a record volume of imports from India and optimistic views over the upcoming OPEC meeting in Vienna.

International Brent crude futures were 0.4 percent up to stand at $52.62 per barrel, while U.S. West Texas Intermediate (WTI) crude futures recorded a growth by 0.3 percent and stood at $50.94 a barrel.

Azeri Light crude traded for $53.76 per barrel on October 11.

The boost is mainly connected with India's oil imports that rose by 4.4 percent in September, as compared to the previous month, up to a record high of 4.47 million barrels per day (bpd), as the country expanded its refining capacity to meet growing fuel demand in the scope of expanding economy.

India, which is currently the third-largest consumer behind the U.S. and China, recorded an increase of 17.7 percent in the level of consumption, as compared to the indices of 2015.

All eyes are now on OPEC’s next policy meeting scheduled for November 30 in Vienna, where participants will discuss the details of how the production cuts will be shared. Moreover, OPEC also needs to convince oil producers outside the group such as Russia to join the deal.

Russian President Vladimir Putin, speaking at Istanbul World Energy Congress said his country supports the recent initiative of OPEC to fix oil production limits and hopes the idea will be embodied in an official agreement, giving a positive signal to the markets and investors.

Russia’s Energy Minister Alexander Novak earlier said Russia will voice its proposal regarding oil production cuts only after the reach of a final decision. Also, Rosneft Vice President Michail Leontyev said the country will provide implementation of the agreement, should the countries reach a real agreement, mentioning that the company has certain doubts about the ability of participants to reach a consent.

Meanwhile, most analysts say much would depend on the timing of any production cut, while majority of supporters of the deal consider following the agreement for a period of six months, revision of terms, however, is not excluded.

Doubts about how much the deal would reduce a crude glut, raise additional concerns. Goldman Sachs added its doubts, saying that the planned oil output cut by OPEC and other exporters has become a "greater possibility," but warned a production cut likely won't be deep enough to re-balance markets in 2017, and that oil prices may fall back into the low $40s per barrel.

Moreover, the International Energy Agency, which is considered to be the energy watchdog of the West, said it was unclear how rapidly global oil supply could fall in line with demand even if OPEC countries and major producer Russia agreed on a steep output cut.

OPEC, which aims to cut production by 700,000 barrels per day to 32.5 million to 33.0 million bpd,   lost more than $1 trillion in revenues over the past three years, due to slump in oil prices.

Global oil supply increased by 0.6 million barrels per day in September, with both OPEC and non-OPEC states boosting their output, according to IEA.

OPEC continued to boost supply, increasing output by 160,000 barrels per day and reaching a record high of 33.64 million barrels per day due to Iraqi pumping and Libya's reopening of its oil terminals.

Meanwhile,  BP Chief Executive Officer Robert Dudley is quite sure about the rise of the oil demand.

The world is going to need energy from all sources, and oil and gas will be required to provide much of that energy for decades to come, he said during the 23rd World Energy Congress in  Istanbul.

Dudley has said he expects global oil prices to stabilize at around $55-$70 per barrel for the rest of the decade, Reuters reported.