Nigeria unlikely to join OPEC cuts before March 2018 -oil minister

Jon Howard
September 16, 2017

October West Texas Intermediate crude for October delivery added $1.07, or 2.2%, to settle at $49.30 a barrel on the New York Mercantile Exchange, for the highest finish since August 9.

The IEA said OPEC crude production fell in August for the first time in five months, thanks to both cuts in production as well as a flare-up in turmoil in Libya disrupting output.

Global oil demand is outpacing expectations and excess crude inventories are falling, yet prices will only rise "modestly" the International Energy Agency said, presenting a challenge for global producers seeking to bolster crude through output cuts.

U.S. West Texas Intermediate crude was above 50 dollars on hitting a four-month high and finished 1.2 per cent higher at 49.89 dollars, the highest since July 31.

The agency said global oil supply dropped 720,000 barrels a day last month from July, to 97.7 million barrels a day, largely due to civil unrest in Libya and disruptions to USA production due to Hurricane Harvey.

"We don't expect a spike up in prices nor do we expect a big drop in prices".

This is the second consecutive month in which the agency has lifted its demand growth forecast after it revised up the growth estimate to 1.5mn bpd in August.

OPEC says world demand growth in 2018 will rise by 1.35 million b/d, an increase of 70,000 b/d from the previous report, to 98.12 million b/d.

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While the Senior Energy Analyst at Interfax Energy's Global Gas Analytics, Abhishek Kumar, "The IEA revising up it's 2017 global oil demand growth forecast, together with persistent weakness in the USA dollar index, has prompted bullish sentiment in the oil market".

This led to a squeeze in the available fuel supply and the biggest decline in US gasoline stockpiles on record last week, an Energy Information Administration report showed Wednesday.

The distillate stocks of the country also fell by 3.2 million barrels.

OPEC recently increased its projected demand for Europe and China while IEA increased projections for oil consumption globally, according to Jon Rigby, an analyst at UBS.

The US dollar index was down 0.4 per cent against a basket of currencies, making oil cheaper for holders of other currencies.

Del Pino also said his country would price its crude oil sales in currencies other than the USA dollar, giving the Chinese yuan and Indian rupee as examples.

For WTI crude to sustain a US$50-plus price tag, traders will require "increasing clarity on Opec's strategy on eventually bringing back barrels onto the market and the possibility of an extension beyond March", said Eric Nuttall, senior portfolio manager with SPR & Co in Toronto.

"Stronger demand and supply restrictions from OPEC and Russian Federation are the main reasons for the oil price upsurge", said analyst Fawad Razaqzada.

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