Dubai: West Texas Intermediate (WTI) prices fell below the psychological $50 (Dh183) per barrel briefly on Thursday, rattled by utterances from Russian President Vladimir Putin who said that he’s was comfortable with oil prices at $60 per barrel, amid rising inventories in the United States.
WTI prices fell to a low of $49.41 per barrel for a few hours, before recovering 0.78 per cent to be at $50.68. Brent crude also recovered from its intra-day low of $57.50, to trade 0.68 per cent higher at $59.16.
“The market has been adversely impacted by Putin’s comment yesterday about being OK with $60 and the Saudis saying they won’t go it alone when it comes to cutting production,” Ole Hansen, head of commodity strategy, Saxo Bank told Gulf News.
Opec (Organisation of the Petroleum Exporting Countries) producers have been singing different tunes. The producer group which was affirming to take steps to balance out the oil market are now talking in various voices. Saudi Arabia, Opec’s biggest oil producer, has said that it won’t cut output on its own while Nigeria, another Opec producer, said that it would be too early to take any call on production cuts.
Saudi Arabia’s Crown Prince Mohammed Bin Salman is expected to talk to Russian president Vladimir Putin in Argentina on the sidelines of Group of 20 meeting. Later all the Opec and non-Opec producers will meet in Vienna on December 6.
“Making any price projections in such a highly political driven environment makes no sense at all. I do believe that oil will be trading higher before year end due to production cuts, a pickup in refinery demand and Iran sanctions,” Hansen said.
The oil markets have been swinging between oversupply and scarcity, even as demand outlook has been on a weaker side due to trade war.
Saudi Arabia produced record oil in November, due to fill in the gap that would had been created by Iran, on whom sanctions were imposed in early November. But the last minute decision by the US administration to give waivers to eight countries including China and India, the top buyers of Iranian oil, adversely impacted the whole supply equation, causing a more than 30 per cent fall in prices.
“On the supply side, Saudi, Russia and the US have been pumping at record levels, close to 40 per cent of global supply (including shale), again offsetting decline from Iran and Venezuela. Add to that, Saudi Arabia is yet again ramping up production just before an Opec meeting (where extension of production cuts are on the table). The sanctions waiver on eight countries importing oil from Iran, has also bought the market some more time as far as expected supply shortages are concerned,” Mustafa Ansari, senior economist, Energy Research at Arab Petroleum Investments Corporation (Apicorp) told Gulf News.
Brent prices fell more than 30 per cent from a high of more than $85 per barrel seen on October 3.
“It is difficult to get more bearish on oil at current levels, which are 34 per cent down from their peak. Opec production and Iranian export data should drive sentiment in the short term and, with most of the bad news priced in, we believe opportunities on oil are skewed to the upside,” said Pierre Melki, equity analyst Advisory Services, Union Bancaire Privée (UBP).
UAE downplays India’s fuel shortage concern
The UAE on Wednesday downplayed India’s concerns about rising fuel prices and possible oil shortage after the six-month US relief to stop import of Iranian oil by New Delhi ends, saying the emirates and Saudi Arabia have stood very strongly with India to cover the deficit in the past.
Amid protest against a proposed refinery in Maharashtra involving India, UAE and Saudi Arabia, the Gulf nation’s envoy to India Ahmad Al Banna said the state government will allocate land in coming weeks.
In a media briefing this week, Foreign Secretary Vijay Gokhale said Prime Minister Narendra Modi will raise the issue of volatility in global oil prices at the G20 Summit in Argentina.