This is also the fifth consecutive week that fuel prices have risen.
Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.
Although the OPEC meeting which was held recently did not end with an agreement to further extend their originally agreed upon production cuts, reports of compliance from OPEC countries and participating non-OPEC producer Russian Federation in going along with the agreed numbers. But the meeting ended without agreement on what oil bulls had hoped for most: an extension of OPEC production cuts, that are due to expire in March 2018, till the end of the year.
Over the past few weeks, a number of signatories to the deal have indicated a willingness to hold back production potentially through 2018. “Changes are really related to Libya and Nigeria and the 100 percent compliance of everyone”, Bijan Zanganeh, Iran ‘s oil minister, told journalists on Friday. But an unanticipated surge in output from those two countries has been undermining the OPEC deal’s effectiveness. US oil prices are still well short of $60 a barrel, but they are already high enough to start encouraging some producers to begin locking in prices for next year and boosting investment. Because of this, I think the market is likely to be very consolidated of over the next session or so, and thereby offering short-term buy and sell opportunities. USA shale continues to add output, and they also have a huge backlog of drilled but uncompleted wells.
Oil prices plummeted on Thursday’s trade with U.S. crude giving up some gains on surprise fall in crude inventories.
If economic growth remains strong then oil demand may continue to outstrip supply, slowly eating into the surplus inventory.
Inventories of US crude fell by roughly 1.9m barrels in the week ended September 22, confounding expectations of a rise of 3.4m barrels. The global benchmark traded at a premium of US$6.56 to WTI yesterday.
Strong fuel demand was compounded by damage caused by Harvey, which hit the U.S. Gulf Coast in August and knocked out nearly a quarter of the country’s refineries, resulting in large-scale fuel stock draws and increased imports.
Gasoline futures rose 4.52 cents, or 2.71%, to $1.7136 a gallon. New orders for nondefense capital goods excluding aircraft, which is a proxy for business investment, rose 0.9% in August after a 1.1% gain in July.