Saudi Arabia: Oil prices continue to rally in October
October 30, 2017
Oil prices continued to trade at levels last seen in mid-2015 due to supply restraints and strong demand for the black gold. The OPEC oil basket traded at USD 57.5 per barrel on 27 October, a 2.6% increase from the same day in September. Oil prices were up 21.8% over the same day in 2016 and 8.0% from the start of the year, when oil traded at USD 53.3 per barrel.
Oil prices have been buttressed in recent weeks by expectations that an extension of the oil production cut, led by Russia and key OPEC members, will be rubberstamped at the 30 November OPEC meeting. In this regard, Saudi Arabia’s Crown Prince Mohammed bin Salman confirmed on 28 September that the country is preparing to support an extension of the OPEC-led output curb due to expire next March. Moreover, compliance with OPEC’s product curbs remains strong and hit 120% in September (116% in August), boosting market sentiment. Strong demand for oil is also supporting crude prices.
Meanwhile, output rose in September among OPEC members. According to the cartel’s latest Monthly Oil Report, combined oil output in OPEC countries rose slightly from 32.70 mbpd in August to 32.75 mbpd in September as a result of higher output in Gabon, Iraq, Libya and Nigeria. Conversely, output declined markedly in Algeria, the United Arab Emirates and Venezuela. Crude output in Saudi Arabia was unchanged at 9.98 mbpd in September.