Published: Sat, October 07, 2017
World Media | By Shelia Harmon

Oil falls below $56 on signs of higher output

Oil falls below $56 on signs of higher output

Global oil price crashed further for a second day yesterday and sapping more strength from a third-quarter rally, amid signs that a global glut in crude may not be clearing as quickly as some had hoped.

Nigeria was shielded from output freeze due to the instability in the country's crude oil production.

In a statement on its website yesterday, Fitch however said oil prices will remain volatile and could periodically exceed its assumptions.

Production in September comprised 733,000 bpd of crude oil and 52,700 bpd of condensate, energy ministry data showed on Tuesday.

Late Tuesday, the American Petroleum Institute published data showing crude oil inventories dropped about 4.1 million barrels and gasoline inventories grew by 4.2 million barrels. Hedge funds are again piling into oil, as are long-term passive investors, attracted not only by rising prices, but also by a profitable change in the forward-price curve . But what has changed in the past few months to indicate the crude oil markets have rebalanced? Brent fell 1.8% to $55.78 per barrel, after hitting a two-year high last week.

As a result, U.S. West Texas Intermediate crude futures rose 14 cents to $50.56 U.S. per barrel mid-morning Wednesday, having fallen below $50.00 earlier in the session.

Rosneft is Russia's largest oil producer. Total volume traded was about 21% below the 100-day average.

Barkindo stated: "These positive developments are good news, not only for our Member Countries, and other non-OPEC producers, but indeed this is equally good news for consumers who rely every day on oil and products to fuel their growing economies".

Crude oil prices were moving closer to even moments before the opening bell in NY. Yet the key question remains - can the current rebalancing effects be sustained?

Gold settled lower Friday, posting losses for the week and September in reaction to a stronger United States dollar, but still rose in the three months to the end of September. It is down 3 percent from the October 2016 level, the benchmark when a global oil deal was reached on curbing oil production. But the supply side of the rebalancing equation is what has many market experts pondering. More than 15 percent of total US refining capacity was impacted by Harvey at its peak, with pipelines from the region operating intermittently and the federal government releasing oil from its strategic reserves in order to offset the market strains. However, output is still expected to climb, even if gradually, to a 48-year record in 2018.

Oil's steady recovery over the past month has been largely thanks to a rebalancing of supply from the Organisation of Petroleum Exporting Countries (OPEC) and allies such as Russian Federation. If not extended, an extra 2 percent of global crude oil could flood the market.

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