- The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Brent oil saw a new price range between $60 and $65 last week. The price came close to $65 with declines in Venezuelan oil production and in oil exports from Iraq, ahead of OPEC’s annual meeting on Nov. 30 in which OPEC and non-OPEC participating countries will decide if they will prolong their oil cut agreement beyond March 2018. However, the recent rises in U.S. oil production and commercial oil inventories resulted in a drop in oil prices to $61. OPEC and the International Energy Agency (IEA) released their monthly oil market report last week that addressed revisions to global oil supply and demand forecasts.
Oil markets last week will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) oil inventories, weekly EIA field production of crude oil in the U.S. and the weekly U.S. Baker Hughes rig count.
Brent oil started the week with a plunge to $63.16 owing to a rise in the U.S. dollar index and a nine-oil rig count increase as reported in Baker Hughes data from the previous week
On Tuesday, the price fell to $62.21 through the weekly growth of 6.51 million barrels in U.S. oil inventories, as detailed in the weekly API report.
Brent further dropped to $61.87 due to the growth of U.S. crude oil production by 25 thousand barrels to 9.64 million barrels per day for the week ending Nov. 10, as reported by the EIA and a weekly rise of 1.85 million barrels in U.S. commercial oil inventories, according to the EIA weekly report on Wednesday.
Although it dwindled to $61.36 due to a surge in the U.S. dollar index on Thursday, it recovered and settled at $62.72 at the end of the week supported by a drop in the dollar index and with the closure of the Keystone pipeline because of last Friday’s leak.
Last week, oil prices diminished primarily as a result of the growth in U.S. oil inventories and production.
In OPEC’s Monthly Oil Market Report, it was anticipated that global oil demand would increase by 1.53 million barrels in 2017 with a more-than-expected oil demand rise in China especially in the third quarter of 2017. The report also projected that world oil demand in 2018 would rise by 1.51 million barrels per day, 131,000 barrels per day more than in earlier predictions. On the supply side, the report revised down growth in non-OPEC production by 20,000 barrels per day for 2017 and by 70,000 barrels per day in 2018 compared to the previous month’s report. The report also anticipates a drop in OPEC crude oil production for October by 151,000 thousand barrels per day to 32.59 million barrels per day.
The IEA’s forecast report in November shows that oil demand has been revised down by 100,000 barrels per day for both 2017 and 2018 to 1.5 million barrels per day and 1.3 million barrels per day, respectively, due to higher prices. The report shows OPEC crude oil supply declined by 80,000 barrels per day to 32.53 million barrels per day, even though global oil supplies increased by 100,000 barrels per day in October.
Brent oil hovered around $62, amid anticipation of an extension to the oil cut agreement at OPEC’s annual meeting at the end of the month. However, further rises in U.S. crude oil production and in U.S. oil inventories could prevent rises towards $65 up to the time of the OPEC meeting at the end of the month.
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