Oil Runs Above $46 As US Rig Count Dips

Oil prices rise to 2-week high on dip in US output

For the second month in a row, major investment banks are lowering their price forecasts.

WTI posted was priced $1 (2.41 percent) higher Friday to $42.50 a barrel.

"For example, tighter monetary policy is a cyclical headwind for oil, while a secular demand rotation into liquid petroleum gases and out of gasoline/diesel will remove support from WTI crude oil prices". "But this still leaves the question of how did we get it so wrong?" analysts from the bank lamented in a research note Thursday.

Libya'a oil output has rebounded from only 690,000 barrels a day at the start of the year, with Sharara, the country's largest oil field, resuming production last month.

Opec and its allies, trying to reduce a crude glut, agreed in May to extend the supply cut through March 2018. Today's gain also hits a seventh-straight session of increase for the commodity; the United States data on a bigger quantity decline on crude production helped buoyed the increases. OPEC has held multiple pow-wows to try and shore up oil prices by cutting production.

The price Venezuela receives for its mix of medium and heavy oil bounced off its lowest point since the coordinated OPEC supply freezes were announced back in November.

Oversupply was cited by 93 percent as the biggest factor influencing prices right now, and 80 percent expect it to be the biggest factor for the remainder of the year. Societe Generale SA has also slashed its crude forecasts. In 2016, the US imported just over 400 million barrels of crude from Saudi Arabia. Venezuela's average oil price for 2016 was $35.15, down from 2015's $44.65 and 2014's $88.42, below 2013's $98.08, 2012's $103.42 and 2011's $101.06, 2010's $72.43, and even 2009s average price of $57.01. Prices will remain in contango, where near-term contracts are cheaper than long-dated ones, until year-end. As oil prices weakened, so indices retreated accordingly.

For the week in discussion, the 1-unit fall in rig count could be attributed to lower offshore activity (now at 21 compared to last week's 22), while units engaged in land operations and inland waters stayed flat at 915 and 4, respectively. Nevertheless, their health hinges very heavily on the trajectory of oil prices, which, for now, doesn't look very encouraging. The effect will cause oil to rally off the lows back toward the $50 area. There is dispute over whether or not the gains are sustainable. Now trade is carried out by the exchange's two divisions, the NYMEX Division and the COMEX Division, the first one designed for trades of oil, gas, platinum, palladium, ethanol, coal, electricity and carbon dioxide emissions, the second one for gold, silver, copper and aluminum.



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