The price of oil recorded a sharp rise at the end of trading last Friday, in light of the investors’ assessment of the impact of the agreement to reduce production levels concluded by the Organization of the Petroleum Exporting Countries, which was implemented at the beginning of January in curbing the global oversupply, and over the course of last week’s transactions, oil prices achieved limited gains. Due to the rising expectations of an increase in US shale oil production.
During last Friday’s trading on the London Stock Exchange, the oil price recorded a gain of 1.07 cents, or 2%, to close trading at 56.70 dollars per barrel. Despite these gains, Brent crude futures recorded a loss of 11 cents, or 0.2%, over the course of the week.
On the New York Stock Exchange, the price of US crude oil rose by 86 cents, or 1.6%, to close at $53.866 at the close of trading last Friday.
It is worth noting that the Organization of the Petroleum Exporting Countries concluded an agreement last December with major oil producers inside and outside the organization to reduce production levels, bringing the total production cut to 1.8 million barrels per day. In an effort to achieve balance and stability for the oil markets, the agreement will reduce about 2% from global supply.
The Organization of the Petroleum Exporting Countries accomplished more than 90% of the total reduction in production levels during the month of January, and the International Energy Agency praised this strong start to the agreement, as the organization's total production declined during the month of January to reach 29.92 million barrels.
Over the course of last month’s trading, oil futures contracts traded in a limited range at a price of $50 a barrel, in light of the mounting market fears of an increase in US shale oil production against the backdrop of the expansion of drilling and exploration companies from their activities and an increase in the number of drilling rigs, as Baker Hughes Oil Services announced last Friday. The oil companies continued to raise the number of drilling rigs during the past week by 8 rigs for the 14th week in a row, bringing the total number of rigs to 591, the highest since October 2015, which may cause the global supply glut crisis to continue in light of the efforts that OPEC is doing to solve this crisis.
As for gasoline contracts, “March delivery”, it increased by 1.9 cents, or 1.3%, to reach the price of a gallon at 1.589 dollars, the highest since January 17.
Heating oil contracts rose by 2.4 cents, or 1.5%, to trade at 1.665 dollars per gallon.
While contracts for natural gas “for March delivery” fell by 10.7 cents, or 3.5%, to reach $3.0344 per million British thermal units, the lowest level in 11 weeks.
During this week, the oil markets are awaiting the release of a number of important reports on US inventories, and investors are awaiting the release of OPEC monthly report on global supply and demand levels, on Monday.
The following is a monitoring of the most important oil market events this week:
Monday February 13
The Organization of the Petroleum Exporting Countries will release its monthly report to assess the performance of the oil market, and later in the day the US Energy Administration will announce the monthly update of the production of shale oil and natural gas.
Tuesday 14th February
The American Petroleum Institute is to release its unofficial report on US inventories for the past week.
Wednesday 15th February
The US Energy Agency will release its official report on US inventories for the week ending February 10.
Thursday 17th February
The US government will announce its weekly report on natural gas storage.
Friday the 18th of February
Baker Hughes Oil Services will publish its weekly report on the number of US rigs.