In trading on Thursday (20/10) at 17:18 WIB the price of West Texas Intermediate (WTI) oil for the November 2016 contract fell 0.47 points or 0.91% to US $ 51.13 per barrel. Meanwhile, the price of Brent oil in December 2016 contract fell 0.46 points or 0.87% to US $ 52.21 per barrel.
U.S. data The Energy Information Administration (EIA) released Wednesday (19/10) showed US crude oil stocks as of Friday (14/10) fell by 5.25 million barrels to 468.71 million barrels. This figure is the lowest supply since January 2016. Meanwhile, the production level increased slightly by 14,000 barrels per day to 8.46 million barrels per day.
However, that level represents a decline of 8.18% or 755,000 barrels during the year. The price of WTI is floating around the level of US $ 50 per barrel as the market is still waiting for OPEC's stance at the meeting that will be held at the end of next month.
Khalid Al-Falih
Saudi Arabia's Energy and Industry Minister Khalid Al-Falih said a number of crude oil producing countries would join OPEC in cutting production.
Ric Spooner, Chief Market Analyst at CMC Markets, said there are two main factors that the market is considering, namely the decline in US inventories and the follow-up to OPEC's plans. US crude oil inventories are heading in the right direction, although they are still very high. The market also responded positively to the OPEC plan to cut supply.
Standard Chartered in its research publication, Monday (17/10), explained that the price of Brent oil continued to consolidate above the level of US $ 50 per barrel and reached a high of US $ 53.73 per barrel on October 10, 2016. The continuation of positive momentum will depend heavily on the process of cooperation between producers. The right moment to establish this cooperation is at the OPEC meeting on November 30, 2016.
Previously, meetings on the agenda of the International Energy Forum in Algeria and the World Energy Congress in Turkey always gave good news. Outside of OPEC, Russian President Vladimir Putin said he supported OPEC and was ready to take part in cutting production.
However, word emerged that Putin wanted a freeze rather than a cut in production. At the November meeting in Vienna, Austria also faced obstacles from its fellow OPEC members. Libya and Nigeria, plan to boost production after their mining industry activities are disrupted due to terrorist attacks. Libya is estimated to produce 560,000 barrels per day or 200,000 barrels higher than September 2016 production.
However, the political environment which is still unstable still allows the production process to experience obstacles again. In Nigeria, the level of production can be increased to 1.8 million barrels per day. As of September 2016, the yield of crude oil was only 1.4 million barrels per day.
In another research publication, Thursday (20/10), Asia Plus Securities said that based on EIA data, Uncle Sam's crude oil inventory fell by 5.2 million barrels. This figure exceeded expectations predicting a growth of 2.2 million barrels per day.
Crude oil imports also fell by 6.47 million barrels per day, the lowest since 2015. Diesel inventories also fell by 1.2 million barrels, while gasoline increased by 2.5 million barrels. Apart from the US, a breath of fresh air for the oil market also came from China, as the world's second largest consumer, increasing imports. The high demand for imports was due to oil production in September which fell 9.8% on an annual basis (YOY) to the level of 3.9 million barrels.
This figure is the lowest production in the last six years. In a meeting last month, OPEC agreed to maintain the level of oil production at the level of 32.5-33 million barrels per day, or a correction of around 700,000 barrels per day. This sentiment will ease the oil market surplus and help balance the fundamentals in Q1 / 2017.
"The market will be focused on the November 30 meeting," said the research.
In addition, the weakening US dollar pushed WTI and Brent prices back above the US $ 50 per barrel mark. Yesterday at 17:20 WIB, the dollar index increased 0.23 points or 0.02% towards 97.943.
Bisnis Indonesia, Page-16, Friday, Oct 21, 2016
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