The month of August put oil prices on the radar of economists after erasing July’s losses, due to a freeze in production in both Russia and Saudi Arabia. The Organization of Petroleum Exporting Countries will meet in Algiers, the Algerian capital in September on the hopes of reaching an agreement between participating members. West Texas Intermediate, after reaching a low price of $39.18 in July, was launched to highs of $48.74 whereas Brent being the international benchmark broke out of the $50 level, topping at $51.21 on these speculations. Previous unscheduled meetings have proven infertile, mostly based on the political rivalry between Saudi Arabia and Iran.
Hindrance may arise also from low oil producing members that initially backed-up a freeze during April’s meeting, as they are suffering recently from pipeline disruptions. Libya, Nigeria and Venezuela particularly have reported to be at record low production. Ever since the meeting in April major oil producers have upped production whereas a freeze at current level will still continue to add to the general glut. Russia is reported to have reached 11.15 million barrels a day while Saudi Arabia announced a climb to 10.67 million barrels - close to the 10.80 million barrels reported to be its maximum. The United States have also reported similar findings about their offshore oil rigs. Despite all data provided pointing to an overflow of oil, the fundamentals have investor sentiment overpowering official data and push oil prices to the upside.
OPEC’s Oligarchies Can’t Agree on Oil Solution
Andamento del mercato - 22/08/2016