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Oil returns more than $ 1 after price increase in Saudi Arabia

A maze of crude oil pipes and valves is depicted during a tour of the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, USA on June 9, 2016. REUTERS / Richard Carson

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  • Saudi Arabia raises monthly crude oil prices to Asia, USA
  • Indirect nuclear talks between the United States and Iran broke last week

SINGAPORE, December 6 (Reuters) – Oil prices rose more than $ 1 a barrel on Monday after Saudi Arabia’s top exporter raised its crude oil prices to Asia and the United States, as talks between the United States and Iran revived a nuclear deal appeared. to hit a dead end.

Brent oil futures for February increased $ 1.61, or 2.3%, to $ 71.49 per barrel by 0720 GMT, while US West Texas Intermediate oil for January was $ 67.89 per barrel, up $ 1.63, or 2 , 5%.

On Sunday, Saudi Arabia raised official sales prices in January for all crude oil grades sold to Asia and the United States by up to 80 cents from the previous month. read more

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The price increases were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC +, to continue to increase its monthly supply by 400,000 barrels per day in January. read more

Prices were also strengthened by reduced prospects for an increase in Iranian oil exports after indirect US-Iranian talks to save the 2015 nuclear deal with Iran broke last week.

Iran says the main challenge to an agreement is the US reluctance to lift all sanctions, while Western powers questioned Tehran’s willingness to rescue the agreement. The talks are expected to resume this week. read more [nL8N2SQ05M]

“Although the group (OPEC +) has claimed that the decision was based solely on market conditions, it is difficult not to see the US hand in play, especially given the visit this week by a US delegation to the kingdom,” consultant JBC Energy said in a note.

“It is almost certain that the Iranian situation was discussed, and Saudi Arabia’s approval of the increase in production suggests that a compromise has been reached and that an improvement in relations with the Biden administration is imminent.”

Despite the planned increase, Russia’s total production failed to rise as the largest producers are likely to have technical problems increasing production in line with the current agreement, the consulting firm said.

JBC Energy has lowered the outlook for crude oil demand during December and January by around 300,000 barrels per day.

The revision has erased most of the supply tightness the market has seen in the past, it added.

In the US, US energy companies maintained the number of oil and natural gas rigs last week. RIGS / U

Omicron has spread to about a third of US states as of Sunday. read more

Both crude oil references picked up again after falling last week for their sixth week in a row for the first time since November 2018 due to concerns that the new coronavirus variant Omicron could affect global economic growth and fuel demand.

Technical charts indicate that WTI was oversold, which may have attracted purchases from short-term traders looking at a price increase, said CMC Markets analyst Kelvin Wong.

“The news flow from Omicron is still confusing with mixed messages from health experts / authorities, so I do not see a very strong rise in oil prices at this time,” he added.

Nevertheless, the head of the International Monetary Fund said that the global lender is likely to lower its global economic growth estimates due to the new variant. read more

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Reporting by Florence Tan; editing by Stephen Coates and Jason Neely

Our standards: Thomson Reuters Trust Principles.

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