Crude oil benchmarks gained support Jan. 17 after Saudi Arabia’s energy minister reportedly made positive remarks about a quick rebalancing of the world oil markets. US markets were closed Jan. 16 for the Martin Luther King Jr. holiday.
Saudi Oil Minister Khalid al-Falih told reporters in UAE that he expects the world oil oversupply could be reduced greatly by July. He said Saudi will adhere strictly to its oil production reduction commitment.
The Organization of Petroleum Exporting Countries and some members outside OPEC agreed to collectively cut 1.8 million b/d of oil production starting in January. OPEC members agreed to cut a total of 1.2 million b/d. Russia, a non-OPEC producer, agreed to cut 300,000 b/d.
The Brent crude contract for March on London’s ICE settled on Jan. 16 up 41¢ to $55.86/bbl. The average price for OPEC’s basket of benchmark crudes for Jan. 16 was $52.17/bbl, down 47¢.
Commerzbank analysts said the Brent crude oil price appears to be trading in the range of $55-56/bbl for now while traders and analysts wait to see if promised oil production cuts materialize. Saudi officials have been discussing the oil market frequently.
On Jan. 12, al-Falih told an energy conference in Abu Dhabi that Saudi production is now less than 10 million b/d, which is below its targeted level (OGJ Online, Jan. 12, 2017).
Al-Falih has said Saudi officials will review production levels in 6 months. Meanwhile, BMI Research noted OPEC’s committee to monitor production levels is scheduled to meet later this week. It will be the first meeting for that committee.
OPEC’s January production levels will not be published until February.
Analysts noted commodity and stock markets were jittery worldwide. Gold prices reached a 2-month high Jan. 17 on worries about the UK leaving the European Union and also uncertainty about a new US president taking office. President-elect Donald J. Trump is scheduled to be inaugurated on Jan. 20.
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