Oil prices continue to rise
Oil prices hit one-month highs on August 16, gaining about 11 percent in a four-day rally as speculation intensified over potential producer action to support prices amid a crude glut.
The traders' confidence increased on the possible deal on the limitation of oil extraction, and as a result global benchmark Brent crude oil October futures on ICE Futures stock were trading at $48.45 per barrel on August 16.
West Texas Intermediate (WTI) crude September futures on NYMEX stood at $45.85 per barrel, recording an increase of 0.24 percent ($0, 11), Interfax reported.
The daily basket price of OPEC basket of fourteen crudes stood at $43.92 a barrel on August 16, recording an increase of $1.32 compared to the previous index of 42.60 fixed on August 12.
Crude oil prices have increased by 75 percent since February, but still remain lower the level of $115 per barrel observed in 2014.
In tote, oil prices have risen by more than 10 percent since early August. Moreover, market participants have ignored data of Baker Hughes, an American oilfield service company, on the significant growth of the number of rigs in the USA. The company said the number of rigs in the country increased by 17 units, which made 3.94 percent and stood at 481 units as of August 12.
The traders are now focused on the forthcoming informal meeting of OPEC members in Algeria, which is scheduled for September 26-28. OPEC members and non-OPEC members are expected to discuss the market situation, including any action that may be required to stabilize prices during the meeting, which will be held on the sidelines of International Energy Forum.
Saudi Oil Minister Khalid al-Falih previously spoke about possible participation of the country in the coordinated actions of OPEC and main exporters to stabilize the market.
Moreover, Russian Energy Minister, Alexander Novak, talking to Asharq Al-Awsat agency, expressed readiness of his country to continue its dialogue with OPEC countries, saying that the possibility of Russian participation in the talks on the limitation of oil extraction is not excluded.
Azerbaijan has not yet got an invitation to the Algeria meeting nevertheless the country’s Energy Ministry said the invitation will be surely considered, should the country receive it.
Meanwhile, Eulogio del Pino, Venezuela’s oil minister has started his foreign tour to oil-producing countries, Ria Novosti reported. Iran is the first country to be visited within the framework of the tour. The aim of the visit is a search of joint solutions for the support of equitable prices in the market.
Venezuelan leader Nicolas Maduro has recently called on world energy players to work together to reach the price of $70 per barrel.
The issue of putting ceilings on oil production to help restore stability and order to the oil market was also on agenda during the meetings of OPEC members in April and July.
Some traders still remain skeptical to the outcome of the forthcoming meeting, expecting a repeat of the Doha meeting.
Oversupply resulted in the sharp decrease of oil prices sending them from $115 per barrel in 2014 to as down as $27 in January 2016, which is considered to be the weakest price since 2003. The prices recovered and averaged $50 amid global production outages from Canada (due to wildfire), Libya and Nigeria ( due to attacks on oil facilities) but then fell again towards $40 in July.
Global oil production continued to grow in July and totaled 95.12 million barrels per day, which is 0.24 million barrels higher that the index of June, according to OPEC estimates. Moreover, oil production in OPEC countries increased by 46,400 barrels per day up to 33.11 million barrels a day in July.
Global demand growth is expected to decline from 1.4 million barrels per day in 2016 to 1.2 million billion barrels in 2017, according to IEA. The forecast for 2017 was cut by 0.1 million barrels per day from last month's report, while the 2016 outlook is unchanged from the last month’s report of IEA.