Oil prices started the week with a fall as seen in different benchmarks. October West Texas Intermediate (WTI) crude oil is trading $48.91 per barrel, down $0.06 or 0.12%. WTI claimed that this is still well within its ascending channel. Meanwhile, November Brent crude oil is trading $51.86 per barrel, down $0.08 or 0.15%.
This slump happened in spite of a higher settled price on Friday, along with the slowdown in Chinese refining activity growth. The latter triggered doubts regarding the said country’s crude demand outlook.
Meanwhile, as Libya exacerbated the oversupply dilemma, other factors are also being watched and being carefully planned for.
Libya and Nigeria
In the beginning of the year, OPEC, Russia, and nine other producers agreed to slash 1.8 million barrels a day in supply until March next year, with the aim of reducing a global supply glut and of re-balancing the market.
Although Libya and Nigeria, the two significant OPEC members, have been exempted at first, they are still being convinced to join the accord as their production becomes more favorable.
“The recovery in Libyan production has been the single largest factor driving global supply growth in the last few months,” said oil analysts at Panmure Gordon, a British corporate and institutional stockbroker and investment bank.
“I think that these countries should join other responsible oil producers and contribute to the market stabilization initiative as they reach a stable level of output,” said Alexander Novak, Russia’s energy minister.
This persuasion was triggered by the decreased impact of the aforementioned deal on the global inventory levels. The minimal impact is in turn due to the increased production of the two countries, as well as the intensified output of U.S. shale.
Traders, as well as consumers, are eyeing certain updates in the coming week in order to have a clearer overview of the current market situation, and to calibrate their steps accordingly.
On Tuesday, a report on the U.S. oil supplies is to be published by the American Petroleum Institute(API). API is the largest U.S. trade association for the oil and natural gas industry.
The weekly data on oil and gasoline stockpiles will then be released on Wednesday by the U.S. Energy Information Administration, a principal agency for collecting, analyzing, and disseminating energy information.
As for natural gas supplies, another weekly report is to be published by the U.S. government on Thursday in light of the claimed growing demand for it, having a weekly gain of around 7.5%. This figure is recorded as its highest weekly price rally.
This week will then be closed by Baker Hughes, an American industrial service company, as they release data on the U.S. oil rig count. The oil rig count serves as a barometer, as well as a proxy, for oil production and/or services demand.
Amid all these, there is also the aggravated conflict between the U.S. and North Korea to consider, as traders keep close tabs on the quick turn of events.
Traders are apparently waiting for the perfect timing. Although the longer-term forecast prices seem unreliable for now, investors may achieve range-bound prices if they intensify the pressure they exert.
Lastly, as WTI and Brent continue to achieve within-range ascend to their target areas (WTI crude: $48.04 to $47.26 per barrel, Brent crude oil: $50.88 to $50.28 per barrel), buyers could still step in to test these zones.
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