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Turkey threat to shut tap on Kurdish crude lifts oil price

27 September, 2017, 00:57 | Author: Kristen Ingram
  • Brent weekly chart

One of the other drivers was continued high compliance by OPEC on its pledged production cut, which has averaged 86% for the year.

Moreover, the number of rigs operating in USA oil fields fell by four to a total of 744 rigs this week, according to data released by oilfield service firm Baker Hughes on Friday.

He added that if a meeting is needed for the cartel to decide whether to extend the cuts, "we'll arrange it". This recent price jump suggests these efforts to rebalance the oil industry by cutting production through early 2018 are working.

The Opec meeting last week provided a few positive headlines but fell short of any actual announcements.

There were no caps imposed on Libya or Nigeria but they pledged to contribute to supply cuts when their production stabilises. The balance of payments deficit, already the largest in the G7, is expected to widen after years of declining North Sea production turned the United Kingdom into a net importer of oil.

Fund managers have amassed a net long position amounting to 695 million barrels, the highest since mid-August and before that late April, in a clear sign of returning confidence. "Compliance was at 94% in July".

USA production has jumped back to pre-hurricane levels at 9.51 mbps but growth seems to have plateaued if the rig count is an indication.

It also echoes tentatively bullish oil traders who have gathered in Singapore for APPEC, an annual event that's typically a good barometer to judge the outlook for oil the coming year. They failed to recognise that USA shale producers were finally starting to focus on return on investment, rather than growth at any cost, Mr Hamm said.

The planned state visit by Saudi Arabia's king to Russian Federation in early October to discuss further cooperation in oil market rebalancing was noteworthy as well, said Goldman's analysts, who pointed out that the two countries were "critical to future supply management".

The major oil producers' production cut deal has supported crude oil prices since November 2016.

Portfolio managers also increased their already large net long position in US gasoline by a further 3 million barrels to 71 million, the highest since April 2014.

The age of persistently weak oil prices is nearing its end, with demand booming and a supply squeeze in the offing, according to Trafigura Group. Against U.S. crude futures, it is trading at its largest premium in over two years, having doubled in just over a month. That market structure, known as backwardation, indicates there is strong immediate demand for oil.

The monthly reports from IEA and Opec also raised their demand forecasts higher for this year. That led the IEA to upwardly revise its growth estimate for the full year.

In the near term, demand could also see a lift as U.S. refineries restart after closure due to Hurricane Harvey. This implies that almost 3.6 mbpd of demand which was affected could now come back. Futures are still trading more than 50 percent lower than mid-2014 levels.

After a recent rise in worldwide crude oil prices due to reduced supply, CPC's average price for crude oil was calculated at US$55.02 per barrel this week, up from US$53.7 per barrel last week, according to its website.

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