Oil Dips as Recent Rebound Seen Lending to Global Output Rise

Posted October 07, 2017

The move by OPEC is meant for warranting balance in the oil market. Companies from Vitol Group, the largest independent oil trader, to energy major BP Plc still see shale as creating a ceiling, especially at current prices.

West Texas International, or WTI, is the benchmark grade of crude oil produced in the US and serves as one of the three main pricing barometers of the global petroleum industry.

Hansen noted that OPEC and other oil producing countries will be happy that the price difference between the WTI and Brent Crude has increased and is about $6 per barrel at the moment.

Oil prices have dropped for the second consecutive day over rising concerns that the global crude glut may not be eliminated as quickly as expected.

Oil slid in NY after its biggest monthly gain in more than a year as the boost from seasonal demand and political tensions in Iraq was expected to fade.

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Despite the downturn in USA traded crude, market participants have maintained optimism, given futures hovering above $50 a barrel, which has been viewed as a key technical level for the commodity. Since oil prices crashed in 2014, West Texas Intermediate has been unable to hold above $50 for more than a few weeks or months.

Brent crude, the benchmark for more than half the world's oil, was at $57.62 a barrel on the ICE Futures Europe exchange at 11:28 a.m. London time. Lukoil's crude oil production rose 0.7% to 1.64 MMbpd during the same period.

"Everyone realizes crude oil is somehow strong, but probably has not enough fuel to go higher", Johannes Benigni, managing director of JBC Energy GmbH, said in a Bloomberg Television interview. As a result, oil prices have soared.

Just as important, global crude inventories have begun to decline.

Gold settled lower Friday, posting losses for the week and September in reaction to a stronger U.S. dollar, but still rose in the three months to the end of September. Also, Russia and OPEC's production cut agreement is set to expire in March 2018. The Organization of the Petroleum Exporting Countries, Russia and other producers agreed to cut their combined oil production by nearly 1.8 million barrels per day from January in a bid to reduce a supply glut that had driven down prices.