The crude oil futures rose by almost 1% in the beginning of the Monday trading session after last week fell to their lowest levels in months. The growth of prices were pushed up by a statement from the OPEC that it was committed to a deal made in September to cut output in order to prop up the market. The European Brent oil grew by 1.18% to 46.12 USD per barrel, while the US West Texas Intermediate (WTI) crude grew by 1.38% to a value of 44.68 USD per barrel.
“We as OPEC we remain committed to the Algiers accord that we … put together. All OPEC 14 we remain committed to the implementation”, said the Secretary General of OPEC, Mohammed Sanusi Barkindo.
Last week the crude oil futures fell to their lowest levels in months and recorded biggest weekly decline in nearly an year, as the skepticism about the ability for OPEC to execute on its Algiers agreement is growting. However, OPEC can still spook markets with its rhetoric. If prices continue to slip, the chances for bullish OPEC headlines grow, which could lift prices briefly even if there is no follow through.
At the end of last week the price of European Brent oil ended the session with a decline of 1.66% to 45.58 USD per barrel, and earlier fell to 45.08 USD per barrel, which was the lowest level since August 11. The US light WTI crude oil with delivery in December fell by 1.32% (0.59 USD) and finished the week at 44.07 USD per barrel. Earlier in the session, the price fell to 43.57 USDper barrel, which was the lowest level since September 20. The prices remained lower after the oil industry service provider Baker Hughes adverts that the number of oil rigs in the US increased by 9 to 450. Weekly the WTI oil fell by 9.5% (4.63 USD). On Wednesday, Energy Information Administration announced that US reserves in Week 43 rose by 14.4 million barrels to 482.6 million barrels, which is historically high for this time of year.
There are also risks that the oil glut, which has dogged markets for over two years, could continue as OPEC’s de-facto leader Saudi Arabia threatened to increase production should the upcoming meeting between lead to no result. Even if Saudi Arabia does not follow through on that threat, its exports could rise. Saudi local oil demand is falling, and just maintaining current output could imply higher exports.
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