After the tentative agreement reached by OPEC countries at the meeting in Algeria on Wednesday two weeks ago, oil prices began to rise. Yesterday, the price of crude oil Brent has reached the level of $52.00 per barrel. OPEC has agreed to cut production to 32.5 – 33 million barrels per day, reducing the production by 1% - 2% from the current record high levels.
After the speech by President of Russia Vladimir Putin at the World Energy Congress in Instanbul at the beginning of this week, the price of crude oil Brent has soared up to a level of 53.70. The price of Brent has grown by 18% in less than a month. Continuation of the rise in oil prices can become a negative factor for oil prices.
Many oil producers in the United States try to conclude long-term sale contracts on the futures market. The rise in sales can cause rapid decline in oil prices, while American producers will continue to increase production volumes. The rise in price of crude oil Brent above $40.00 per barrel may provoke de-preservation of shale oil drilling rigs in the United States.
The number of active drilling rigs in the US has been growing for the tenth consecutive week. Last week the number of rigs in the USA has reached 428 units.
The Minister of Energy of Saudi Arabia Khalid al-falih has said on Monday that his plans for future are optimistic and he believes that in November major oil producers will be able to come to an agreement to reduce oil production. Today, the Oil Minister of the Arab Republic said that the discussion of the details of the agreement to reduce oil production by OPEC will be postponed until the summit meeting in Vienna.
Today at 23:30 (GMT+3), American Petroleum Institute (API) will publish report on changes to the US oil reserves for last week. It is likely that the US oil reserves will go down. The US can have problems with oil supply because of the hurricane "Matthew". If the US oil reserves goes down, the price of crude oil Brent can soar up above $53.70, the recent local highs, and continue to rise up to the level of $56.00 per barrel.
On Thursday at 17:30 GMT the data from International Energy Agency and the US Department of Energy will be issued.
It is expected that volatility in oil prices will be high until the end of the week. On Friday at 19:00 the head of the US Fed Janet Yellen will give a speech and at 20:00 a report on the number of active drilling rigs in the US from oilfield services company Baker Hughes will be published. The report is an important indicator of the activity in the US oil sector. It has strong impact on the oil prices.
Meantime, the rise in oil prices is prevented by the rise in the USD and the fact that oil supply in the world exceeds the demand.