TODAY.AZ / Business

Oil prices mixed amid volatile signs

17 January 2017 [14:00] - TODAY.AZ

By Nigar Abbasova

Crude oil prices moved in volatile territory in early Tuesday trading amid mixed signals from the market.

World oil prices reacted to mixed signals from Saudi Arabia on strict adherence to its reduction pledges, a report forecasting an increase in U.S. output, as well as skepticism that oversupply would be curbed.

Brent futures stood at $55.67 per barrel, 19 cents down, while U.S. West Texas Intermediate (WTI) crude oil futures were trading at $52.39 recording an increase of 2 cents, Reuters reported. The price of a barrel of Azeri Light crude oil decreased $0.14 to stand at $55.93.

The market received a strong support from the top crude exporter and de-facto leader of OPEC, Saudi Arabia, which is expected to shoulder the bulk of supply reductions.

Saudi Energy Minister Khalid al-Falih said that the Kingdom would adhere to its pledges, expressing confidence that OPEC's plan to prop up prices would work. He added that he was encouraged by signs of commitments by other participants since the 6-month deal came into effect.

However, his comments were not assessed as a totally positive as he said producers are unlikely to extend the agreement beyond six months.

Supportive comments also came from OPEC Secretary-General Mohammed Barkindo, who was in Caracas for a meeting with President Nicolas Maduro. Barkindo forecasted that stability would return to oil markets this year, expressing his optimism that full and timely implementation of the historic decision will improve the situation tremendously.

Also, Iran’s Oil Minister Bijan Namdar Zanganeh evaluated the situation in oil market as “positive”, saying the “era of expensive oil” has reached.

“I am sure that OPEC and non-OPEC states would commit to oil cut. The physical effect of the deal would increase oil price more by clearing the glut in markets,” Iran’s state-run IRIB TV quoted the minister as saying.

Meanwhile, the International Monetary Fund (IMF) has increased the forecast for the average oil price for 2017 by $0.6 to $51.2 per barrel, according to IMF’s updated World Economic Outlook.

Despite a reportedly high level of compliance crude prices have fallen almost 5 percent since their early January peaks, increasing skepticism among traders.  Investors are still doubtful that OPEC and its allies can trim output enough to push up prices, while the question, which remains is will the agreement be enough to give a respite to the market.

On the other side, expectations of rising oil output in the United States also restricts price gains. U.S. oil output is now at 8.95 million bpd, up from less than 8.5 million bpd in June last year and generally at levels in 2014.  Goldman Sachs said it expects year-on-year U.S. oil production to rise by 235,000 bpd in 2017.

URL: http://www.today.az/news/business/157785.html

Print version

Views: 1970

Connect with us. Get latest news and updates.

Recommend news to friend

  • Your name:
  • Your e-mail:
  • Friend's name:
  • Friend's e-mail: