US benchmark crude West Texas Intermediate (WTI) was trading at $46.69 a barrel Thursday at 11:56 a.m. EDT.
Global benchmark Brent crude oil rose $1.28 to a high of $48.75 a barrel before easing back to trade around $48.30 by 1350 GMT. Globally traded Brent futures were up half a dollar, or more than 1%, at $47.97 a barrel. The gap between supply and demand will continue to put pressure on the crude oil prices.
By mopping up some of the surplus, China encourages a gentler scenario in which the “financial stress” of $40 oil gradually causes highly indebted shale producers to curb production, Currie said. Since the commodity prices have hit their multi-year lows in the recent months, these companies have been struggling to sustain their production due to their high production costs.
The official further stated that Iran is following the implementation of two scenarios in order to rejoin the world oil market continuing that, “in the first scenario we deal with big oil and gas companies so that they will invest in Iran’s industry”. This includes losses of more than a quarter since June this year as a sharp slowdown in China has sparked concern over the health of the world economy.
Additionally, US lawmakers could also be exclusively months away from lifting a four-decade-old ban on most oil exports, though the outlook for oil costs in 2016 and past recommend it might be years earlier than merchants care.
Oil prices are moving with the stock market, said Price Futures Group analyst Phil Flynn, as investors avoid riskier assets in favor of safe havens like bonds and gold.
The Fed decision to leave interest rates unchanged surprised many analysts, but the general consensus remains that it’s only a matter of time.
“In the long run, there’s far more risk to being a leveraged short”, said George Zivic, a New York-based portfolio manager at OppenheimerFunds Inc., which oversees $220-billion. Therefore, interest rates do not mean much for crude oil at this point but Chinese weakness and a global oversupply of the energy commodity does. The August average of 9.3 million barrels of oil per day is 5.4 percent above past year.
USA crude production dropped by 18,000 barrels a day to 9.1 million last week, the Energy Information Administration reported Wednesday. By March, strength in product demand and price translated into a bottom for crude oil and a 49% rally in nine weeks in the raw commodity. We are concerned that repealing the 40-year-old statutory prohibition on exporting USA crude oil could harm consumers, businesses and our national security.
Opec, non-Opec and the United States are expected to slow down in their production next year.