The global benchmark on Monday climbed 3.8%, marking the highest front-month contract finish since early July 2015.
The other supply issue is how quickly US shale drillers can respond to higher prices, and how effectively any extra production can reach global markets.
“I do expect the deal to be extended beyond its expiry in March 2018, as it will be necessary to keep stocks drawing down”, Non-Resident Fellow for Energy at the Brookings Doha Center, and CEO of Qamar Energy (Dubai) Robin Mills told Azernews, adding that the compliance to the deal may weaken, though. The improved compliance rate “underscores the resolute commitment of participating producing countries to cooperate towards the rebalancing of the market”. That amount has offset about half of the output reduced by the rest of OPEC – the group agreed to cut production by 1.2 mb/d.
The 14-member OPEC, led by top crude exporter Saudi Arabia, will meet in Vienna at the end of November to discuss the possibility of extending production cuts and inviting other non-member oil producers to contribute to more cuts. There was a discussion about monitoring exports along with production but there was no concrete announcement on that front.
Prices rose due to a fall in United States crude oil inventories from September 15-22, 2017. The rig count is an indicator of future USA shale oil production.
The recovery in U.S. refinery demand after Hurricane Harvey also supported crude oil prices. There were also comments that an agreement for production levels further out was required.
Figures released Wednesday by the Energy Information Administration revealed that crude inventories fell by 1.8 million barrels in the week to September 22, compared with analysts’ expectations for an increase of 3.4 million barrels. “That would be a big loss to the market”, said Tamas Varga, analyst at brokerage PVM Oil Associates.
Demand remains robust and buoyed by worldwide demand for US distillates. For Texans, meanwhile, about 9.9 percent more were on the payroll in the oil and gas industry than a year ago, though the level is still about 28 percent lower than the peak in late 2014. Floating storage is a more expensive way to store crude, and will be first to draw down. Prices increased 26c to $52.14 on Wednesday.
OPEC has now achieved its goal of flipping Brent crude’s market structure into so-called backwardation, said Francisco Blanch, head of commodities and derivatives research at Bank of America Merrill Lynch.
USA oil rig count is down by 12 so far in Q3 compared to sharp increases in the first half of this year. The third quarter, for which there is still one week to go, has seen the total number of rigs decrease by 12.
On September 25, 2017, Kurdish people voted “yes” in their independence referendum. Turkey’s port of Ceyhan pumps more than 500,000 barrels per day sourced from the northern Iraqi region to foreign markets.