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Saudi Arabia Determined to End the Oil Supply Glut

27 October, 2017, 01:02 | Author: Samuel Sharp
  • Brent daily chart

Oil prices closed at a six-month high, boosted by expectations for lower supply due to geopolitical risks, falling US stockpiles and OPEC's dedication to cutting production.

In post settlement trade, prices briefly pared gains before steadying, in response to data from industry group the American Petroleum Institute showing crude inventories built up while gasoline and diesel drew down.

On Tuesday, Saudi Arabian Oil Minister Khalid al-Falih reiterated intentions to do whatever is necessary to bring global oil inventories back to the five-year average.

Minister Khalid al-Falih, told Reuters at an investor conference in Riyadh on Tuesday that global oil demand is expected to grow by 45 per cent by 2050 despite an worldwide push for using more renewable sources of energy.

According to the source, the price for November Futures WTI oil increased by 0,48%, totalling to $52,09 per barrel on the New York Mercantile Exchange (NYMEX). "There's nervousness (about Kurdistan) in the market, but I think that the production cut.is really driving traders".

The Organization of the Petroleum Exporting Countries (OPEC), plus Russian Federation and nine other producers, have cut oil output by about 1.8 million barrels per day (bpd) since January.

West Texas Intermediate was also running bullishly in today's market and was reported to rally by 6 cents or a total of 0.01% and settling at $51.90 per barrel.


In May, they made a decision to extend the deal until the end of March, largely because their efforts to balance the market have been offset by increasing U.S. shale production.

EIA reported USA crude oil production at 9.5 million barrels per day last week, 1.1 million barrels per day more than the previous week.

Preliminary data from the American Petroleum Institute (API), an industry group, said USA crude oil stocks rose 519,000 barrels in the week as refined products drew.

Output from Kirkuk fell last week when Iraqi forces retook control of oilfields from Kurdish fighters who had been there since 2014.

Crude oil exports through the Iraqi Kurdistan controlled-pipeline to the Turkish port of Ceyhan rose to 288,000 bpd on Monday afternoon, from 255,000 bpd earlier in the day, a shipping source told Reuters.

Iraq has adhered less to the supply deal with non-OPEC producers than OPEC peers such as Saudi Arabia and Kuwait, but the drop in its October shipments, if sustained, will help boost Iraqi and overall compliance with the deal.

Prices have been supported over the past few sessions by supply disruptions in northern Iraq, where tensions have been high since the Kurdistan region's vote in favour of independence last month.

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