Oil prices continued to rise on Monday as data signalled that the USA crude output is contracting. Demand will climb more this year than previously projected amid cheaper fuel prices, OPEC Secretary-General Abdalla Salem El-Badri said yesterday in a statement to the worldwide Monetary Fund.
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Novak’s remarks sent oil prices soaring by 2.3 percent in London trading, with Brent crude settling up at $49.25 a barrel.
The USA economy added a disappointing 142,000 jobs during the month, well below analyst estimates of 205,000 and the August jobs level of 173,000 was revised sharply lower to 136,000, surprising analysts. The pair is expected to find its first resistance at 50.41, and a rise through could take it to the next resistance level of 51.72.
Crude prices witnessed a massive up move during the trading session today.
At the same time, news came that Russian Federation and Saudi Arabia along with other big producers have indicated about continuing discussions, which also supported the market.
In fact, on Sunday, Saudi Aramco, the national oil company of Saudi Arabia, announced a cut to the official November price for sales of medium grade crude to Asian and U.S. customers to a discount of $3.20 a barrel below the regional benchmark. Recent developments, including the agreement to lift trade sanctions from Iran, and heightened supply from countries like United States, Russia, and the Organization of Petroleum Exporting Countries (OPEC), led to supply worries among investors. “Less supply means high prices”. “The government says such measures are necessary because of current economic risks brought about by fluctuations in the ruble’s value and the falling price of oil”, Slon writes.
Fatih Birol, the executive director of the worldwide Energy Agency (IEA), told CNBC Tuesday low prices will prompt US producers to cut output, creating upward price pressure. “There is one problem we are facing: the overhang of 200 million barrels”. The dollar shares an inverse relationship with crude prices and therefore a weaker dollar is seen as a huge positive for crude prices in the near term.
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The larger-than-expected stockpiles reignited fears “that the global oil supply glut is far from over”, said OCBC.
