Benchmarknews, Singapore-oil prices continued to rise in early trade this week in Asia. The increase pushed futures prices to the highest level in more than a month ahead of a meeting of the Organization of petroleum exporting countries.
Major oil producers will join with members of the OPEC in Vienna on Thursday this week. The meeting to discuss the extension of the agreement 6 months to trim their production amounted to 1.8 million barrels per day to mid-2017.
There is unanimity among observers that a deal will be extended, and the only real question is how long and whether more productionwill be reduced.
Sentiment about the new agreement has helped oil rebound of 10% in the last two weeks.
This step, can result in the oil market faced the scenario the buy-the-rumor, sell-the-news that the price of crude oil goes back at least a bit apart from the announcement Thursday
, as quoted marketwatch.com
For now, the bullish sentiment still holdsfirm. Light, sweet crude oil for delivery in July CLM7, + 0.87% on the New York Mercantile Exchange recently rose 36 cents or 0.7% to US $51,02 a barrel in Globex electronic session. Crude oil Brent LCON7, 0.62% +, the global benchmark, up 34 cents or 0.6% to US $53,95 per barrel.
“We are sure the world oil market balances back,” said Nomura. But the investment bank also argued that “the restrictions on the supply of a longer time needed to drain the excess inventory that built up over the years withhigh oil prices.” It added while OPEC has been 90%-compliant with cuts promised so far, the balancing can still be as far as 18 months away.
Gordon Kwan, head of regional energy research at Nomura, said the reduction in the production of over 2 million barrels a day might be expected at this time. More over, Saudi Arabia showed signs of impatience with the rate of re-balancing. During this moving slowly because U.S. producers have risen sharply in the trend.
“But a long extension, maybe one year, from cutting output further at this time can push U.S. shale,” said Capital Economics. But even with the higher US inventories, oil market under OPEC’S production will eventually move toward significant deficit.
NYMEX June gasoline futures RBM7, + 0.61% recently rode the 0.7% at $1.6638 per gallon, diesel rose 0.8% to $1.5946 and ICE gasoil rose 0.7% to $477 per metric ton. … (Red).