On Friday, U.S. oil futures held beyond $50 per barrel as the entire crude forward curve pushed beyond that level in an indication that financial markets have increased confidence in the sector.
On Thursday, U.S. West Texas Intermediate (WTI) futures settled at $50.44 per barrel, the first settlement beyond $50 since June 24 and increased 6 cents on Friday at $50.50 per barrel at 0542 GMT.
At the beginning of this week, Brent futures already moved over $50, and were trading at $52.57 per barrel at 0542 GMT on Friday, also increase 6 cents.
With both front month agreements above $50 per barrel and each forward curve in contango, in which agreements for future delivery are more costly than those for immediate sale, the whole crude futures complex has draw back over $50 per barrel.
“There is still no end in sight for the current bullish run. Speculators have been buying every short-term dip, a strategy that has evidently been working very well so far,” according to an analyst.
“This trend could well continue for some yet as after all crude oil’s fundamental outlook continues to improve: as well as the planned OPEC oil output cut, we have seen surprise inventory destocking in the U.S. for five straight weeks now. Consequently, U.S. oil stocks have now fallen below 500 million barrels for the first time since January,” he added.
The Organization of the Petroleum Exporting Countries (OPEC) plans to approve on a coordinated output cut when it meets in late November, in a bid to rein in a global fuel supply overhang that has dogged prices for the last two years.
In spite of the increasing confidence of financial oil traders in higher prices, the physical market stays relatively weak.
In an indication of ongoing oversupply, top exporter Saudi Arabia reduce its benchmark crude prices to Asia this week, and analysts at JBC Energy warned there was “a growing disconnect between the physical and the financial (oil) market” which would likely converge.
On Friday, HSBC stated recent increase in Brent and U.S. West Texas Intermediate (WTI) should be kept in perspective, notifying that seasonal aspects of the price rally would weaken again soon.
On Additional News
On Thursday, OPEC sources and the Russian energy minister stated, energy ministers from Saudi Arabia, Iran and Iraq will be among representatives of key OPEC producers meeting Russian representatives for casual talks on oil production in Istanbul next week.
Last week, the Organization of the Petroleum Exporting Countries agreed a deal to limit crude output and is looking to secure the cooperation of non-OPEC members such as Russia to help to support oil prices.
On Thursday, Russian Energy Minister Alexander Novak stated that he intended to meet OPEC Secretary General Mohammed Barkindo in Istanbul, according to the reports, adding that the minister stated he intended to discuss OPEC’s production agreement with ministers of other oil-producing countries.
“Other energy ministers who will be present in the Turkish city as it hosts the World Energy Congress include those of the United Arab Emirates, Algeria, Venezuela and Qatar, which holds the OPEC presidency,” according to sources.
The sources stated, no decision is anticipated to be taken in Istanbul, however, the meeting will be a possibility for the representatives to discuss the next move after last week’s Algiers meeting.
The deal reached in Algiers is anticipated to be implemented this year and Organization of the Petroleum Exporting Countries (OPEC) ministers will meet next in Vienna on Nov. 30 to established the group’s supply policy.
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