ONLINE FOREX BROKER
2019-11-11 • Updated
Oil prices recovered some losses at the start of the week, rebounding from a 3% fall in the previous session amid a stronger USD and oversupply worries.
The number of active US oil rigs increased by 7 bringing the total count to 763 rigs this week, according to data published by Baker Hughes on Friday. The data contradicted investors’ expectations of the continued rig count fall, after the previous week decline (the first one from January).
The rising activity of the US oil industry comes as OPEC’s supplies remain ample despite the group’s commitment to cut output by the end of March 2018. OPEC exported around 26 million barrels per day in last month which 450000 barrels per day more than in May despite the extension of the OPEC’s output cut deal.
Additional drag was upbeat nonfarm payrolls data from the US that triggered USD buying.
This week modest rebound in oil prices was a reflection of opportunistic buying after the Friday’s downfall. Another boost was the news about the OPEC’s intention to cap unlimited supply of oil from Nigeria and Libya pumping industries. Up to day, they were exempt from OPEC’s production cut agreement due to their internal turbulences. After the appeasement, their production capacities have improved. Libya’s crude oil output has surged to more than one million barrels a day, up from 400 thousand in October, while Nigeria’s output has risen to 1.6 million barrels a day, up from 200,000 barrels a day in October.
These are significant increases. Nobody argues with that. Nevertheless, the main concern of investors is rising US oil output. The US Energy Information Administration said the US output has increased to almost 9.34 million barrels per day last week dragging oil prices downwards (the earlier rally had started due to US oil production’s downfall).
The African produced were invited to participate at the OPEC-non-OPEC meeting on July 24 in Saint-Petersburg to discuss the levels and stability of their production. If Libya and Nigeria manage to stabilize their oil production at today’s levels, they will be asked to decrease it as soon as possible. The other participants of production cut agreement won’t be demanded additional sacrifices. Mohammad Barkindo, Secretary General of OPEC, told media in Istanbul before the World Petroleum Congress (July 9-13) that OPEC/non-OPEC ministerial committee are not going to discuss the possibility of further cuts.
In the short-term, the oil prices will continue to fluctuate under the influence of the data reflecting the performance of the US oil industry (weekly crude inventory estimates coming on Wednesday, and Friday’s Baker Hughes rig count). As we approach the OPEC/non-OPEC meeting the focus will be on the participants’ decision to curb or not curb the African countries’ production, to discuss the prolongation of the output cut deal or leave this question open.
At the time of writing, Brent oil futures are trading at $46.75 well below the psychologically important level of $50. They added some gains in Tokyo morning, then lost their zest as the European session commenced. WTI futures are down to $44.23 from today’s opening price of $44.52
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
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