Oil prices stabilized on Thursday trading session after a sharp drop, followed the Federal Reserve to increase interest rates in the US. The futures on Brent oil were traded at 53.93 USD per barrel, rising 0.03 USD against the last closing level. Meanwhile, futures on US light WTI crude oil was traded at 50.96 USD per barrel, representing a decrease of 0.08 USD compared to the closing level of the previous session.
The Australian bank ANZ predicted that oil markets will experience a significant deficit in the first half of 2017 if OPEC and other producers, led by Russia, comply with an agreement to cut production by 1.8 million barrels per day. This will most likely push oil prices above 60 USD per barrel early next year.
Although remaining unclear whether OPEC and other producers will comply with the contract agreement, a market with tight spreads will be the result of the decrease in investments in new production after operators reduced costs to survive in the environment at low prices.
According to experts, the next year will be the third in which the crude oil investments will decrease by about 3%. Going back to the 80s, has the same trend of decline in investments, when the oil prices were again in depression. In short term the crude oil will get support from dwindling stocks in the United States.
The data of the Energy Information Administration (EIA) showed that crude stocks in the US last week fell by 2.56 million barrels to 483.19 million barrels.
Relatively stable prices today come amid declines on Wednesday night, when crude oil fell more than 3% amid strong dollar. The US currency rose to near 14-year high against a basket of currencies after the US Federal Reserve raised interest rates for the first time in a year and signaled for more aggressive monetary policy in 2017.
Strong dollar could hit demand for raw materials by making the purchase more expensive for countries using other currencies.
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