On Tuesday, oil prices increase to their highest level since late October as the market priced in an expected reduction in production led by producer cartel OPEC, however, analysts advised that a failure to agree a reduction could lead to a deepening supply surplus by early 2017.
On Tuesday, International Brent crude futures increase as high as $49.63 a barrel, increase 1.5% from the previous settlement and the highest since Oct. 31. Brent was trading at $49.58 per barrel at 0525 GMT, up 68 cents, or 1.4%.
U.S. West Texas Intermediate (WTI) crude futures increased 69 cents, or 1.4%, at $48.93 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) is trying by Nov. 30 to take its 14 member states and non-OPEC producer Russia to approve on a coordinated output reduction to prop up the market by bringing production into line with consumption.
ANZ bank said on Tuesday, “With investors becoming more optimistic about OPEC reaching an agreement on production cuts, oil prices should continue to edge higher in trading today.”
Goldman Sachs stated in a note to clients that the probabilities of an Organization of the Petroleum Exporting Countries (OPEC) reduction had surges as producers needed to respond to eroding supply and demand fundamentals, which the bank stated “have weakened sharply since OPEC announced a tentative agreement to cut production.”
Should OPEC and other producers, particularly Russia, fail to approve a cutback, Goldman stated it anticipated an oil supply excess of 0.7 million barrels per day (bpd) for the 1st quarter of 2017.
On Additional New
Brent crude futures increase $1.67 to $48.53 a barrel by 10:46 a.m. ET (1546 GMT), having reached $48.62, the loftiest level since Nov. 1. U.S. West Texas Intermediate (WTI) supported by $1.56 to $47.25 a barrel, after increasing as high as $47.33.
The greenback also inched lower, easing off last week’s 13-1/2-year highs as Treasury yields pushed lower, strengthening oil and the broader commodities complex including copper and gold.
Goldman Sachs analysts stated in a note that the odds of an OPEC cut succeeding have increased, and believe the global oil surplus will change into a deficit by the middle of next year, which would support prices.
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