Saudi’s Signal boost oil trades over $60 per barrel

The oil traded above $60 per barrel because of concerns in relevance to the Libyan supply. Islamist militias were hit by the Government forces at Es Sider, which is close to the largest terminal of the nation. Brent was fluctuating between loses and gains at London. Libya government confirmed that this action was a result of militias attack on the Es Sider, which led to stoppages in loading earlier this December. Mohamed Elharari who is the spokesperson of the state owned National Oil Corporation said that the output of Libya has reduced significantly to 3,52,000 barrels per day. The country used to produce 1.6 million barrels per day earlier in 2011. On the eve of Christmas wherein, most of Europe individuals are on holiday, the trading volumes went to 89%, lowest to the 100 day average.

Also, futures fell to 45% this year, which was the biggest drop since the year 2008. This was because the Organization of Petroleum Exporting Countries (OPEC) did not cut oil supply, fearing loss of market share. On the other hand the high levels of output from the U.S in the past three decades, created excess levels of oil in the global scenario.

John Sfakianakis, who is a former economic counselor for the Saudi Government, said that Saudi Arabia is assuming an $80 per barrel price for the year 2015. However, the Government expected $103 per barrel price for the year 2014. Olivier Jakob, who is the MD in Zug for Petromatrix GmbH, said that the Libya situation had worsened and supplies from the country could be written off. He added that they were getting supplies from Libya, even without an OPEC supply disruption. February settlement of Brent on the London origin ICE Futures Exchange, Europe saw addition of 46 cents or 0.08 percent to the cost of $60.7 per barrel. European bench mark crude was being traded to West Texas Intermediate at a $4.21 premium.

The February delivery for the West Texas Intermediate in the electronic trading of New York Mercantile Exchange rose to $56.27 by 43 cents. The traded volume of futures was about 49% lower than the 100 day average.

Earlier this week, Iraq approved a $60 per barrel budget. The Baghdad Government accepts the ‘Saudi theory’ and realizes the need to protect the market share of OPEC to minimize outputs from other places. Hence, it suggests and supports oil price drop. This was confirmed by Adel Abdul Mahdi, Oil Minister, earlier this week through an interview.

On the November 27th meeting, it was decided by the OPEC members to maintain the supply of 30 million barrels per day. The group which consists of 12 members, which supply almost 40% of the oil requirements around the world, pumped nearly 30.56 million barrels everyday in the month of November. The survey and analysis suggests that the supply exceeded the target for the 6th continuous month. The West Texas Intermediate was in the highest volatility in the month of October.

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