The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Last week, Brent oil price recovered losses led mainly on the back of chaos in financial markets and sharp rises in U.S. oil production, also with declines in the U.S. dollar index and a slowdown of U.S. oil production growth.
Positive statements made by the Energy Minister Khalid al-Falih of Saudi Arabia, the de facto OPEC leader and Russia’s Energy Minister Alexander Novak on the future of OPEC and non-OPEC participating countries’ cooperation in the oil cut agreement in Riyadh last week also supported a price recovery.
However, Mohammad Barkindo, OPEC’s secretary general stated at the Nigeria International Petroleum Summit on Monday, Feb. 19 that the surplus over the five-year average in oil inventories in industrialized countries increased in January 2018.
Last week’s oil markets will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA crude oil production in the U.S. and weekly U.S. Baker Hughes rig count.
Brent oil began the week with a slight fall to $62.59 due to a 26-oil rig count rise in the U.S. from the previous week.
However, the price recovered to $62.72 through declines in the dollar index on Tuesday.
It continued up to $64.36 through further declines in the dollar on Wednesday.
Even though it slid down to $64.33 on Thursday owing to concerns with the rise in U.S. oil production and in commercial oil inventories, it increased and settled at $64.84 at the end of the week sustained with the recovery in the financial markets.
Saudi’s Energy Minister and Russia’s Energy Minister met in Riyadh last week where both sought to agree on further cooperation in the oil output restraint rather than an early exit from their oil cut agreement. Both the Russian Federation President and the Saudi King declared their support for further cooperation on the same day. Al-Falih also outlined that future cooperation should focus on measuring the five-year average of oil stocks in non-OECD countries as well as OECD countries. In effect, such cooperation would mean another new target other than the surplus removal over the five-year average of oil stocks in OECD countries, which is set to be good news for oil prices.
OPEC’s Secretary General stated that the surplus over the five-year average in oil inventories in industrialized countries increased in January 2018 and stands at 74 million barrels in January. However, he also added that the conformity level of OPEC and non-OPEC countries grew in January to 133 percent from 129 percent in December 2017. As a result of further surpluses in the market, a slow recovery in oil prices is expected.
Oil markets will continue to focus on changes in U.S. oil production and in commercial oil inventories, amid the recent de-escalation in U.S. oil production and the latest rises in U.S. oil inventories. Consequently, Brent oil will continue to move between $62 and $65 this week.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.