This is almost a 3 million barrel swing in crude oil supply from November 2014 when supply exceeded demand by more than 2 million barrels per day, creating a glut in the global oil market, followed by a downturn in industry like no other.
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Oil prices have been steadily increasing over the past few trading days, with the price per barrel of US crude reaching $45.66 and the Brent crude global benchmark hitting $48.18 on Monday afternoon. Opec has just reached an all-time high production of over 33 million barrels of oil per day.
Nigerian Minister of State for Petroleum Emmanuel Kachikwu has “sparse” optimism that Opec will trim output, he said in a Twitter post.
Once the two nations began collaborations, oil prices rose from $42 a barrel to over $45 a barrel.
At 3:04pm BST, the Brent front month futures contract rose 0.58% or 28 cents extending overnight gains to $48.63 per barrel, while the West Texas Intermediate rose 0.79% or 36 cents to $46.10 per barrel, as Venezuela led the initiative to bring oil producers round to the negotiating table. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative.
Iran, OPEC’s third biggest producer, says that it needs to regain market share lost during years of Western sanctions.
What we are seeing in the oil market is an effective jawboning by the Saudi’s, talking up the prospects of an OPEC deal to move the oil price up.
Russian Energy Minister Alexander Novak said on Monday his country is opening up to an agreement with other major oil producers to cap output “if necessary” to achieve market stability.
U.S. West Texas Intermediate crude was trading at $45.76 a barrel, up 2 cents from its previous close, and still over 16 percent above its $39.19 monthly low from August 3.
The Saudis and other Cartel members had watched the US grow its crude oil production from 5 million barrels a day to 9.7 million and soon to be over 10 million in just a matter of seven years. A possible deal on capping production between members of the Opec and non-member producing countries was first flagged in February but deal discussions in April ended with no final accord.
But analysts said there were doubts an accord would be reached.
Crude oil prices lost just under 20% of their value in the last month and the single biggest force acting on them have been stocks, particularly United States gasoline stocks, which have proven to be very resilient. The aim of the visit is a search of joint solutions for the support of equitable prices in the market.
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“However, if prices go down further, some OPEC members will try to send positive signals to the market to keep prices at least at current levels”, the source added. Crude supplies rose by 1.06 million barrels as of August 5, Energy Information Administration data show.
