Oil prices advance 1% on expectations of OPEC led output cuts

Цена на нефть обновила минимум с октября 2017 года

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members will meet in Vienna, Austria on December 6 to discuss a new round of production cuts of 1 million to 1.4 million barrels per day (bpd) and possibly more, OPEC delegates told Reuters earlier this month. This indicates at a possible trench being created by the oil marketing companies to form a buffer in case the oil prices increase again.

Regional oil exporters are keen to end the intense price volatility that has characterised the market volatility which has seen the price of crude fall by about 30 percent since early October.

Implied volatility, a gauge of options demand, soared, with US crude implied volatility hitting its highest level since February 2016 last week.

"This is effectively an achievement of Saudi Arabia and the crown prince, he was the initiator of this work", Putin told an investment conference in Moscow on Wednesday.

Although today's early sell-off contributed to the largest one-month decline in crude oil since the financial crisis of 2008, the intraday technical reversal is the first sign in weeks that the buying may be greater-than-the-selling at current price levels. Producers are discussing a supply curb of 1 million to 1.4 million barrels per day (bpd) and possibly more. Wise stated that that would depend on the severity of cuts adopted by OPEC and its allies.

Global benchmark Brent crude fell by 5.5 % on Friday declining to the year's lowest point of $59 per barrel.

"The shutdown.is reducing supply of a North Sea crude that helps set global prices", said Sukrit Vijayakar, director of energy consultancy Trifecta, referring to Buzzards's role in the settlement of Brent futures.

Adding to the uncertainty in the oil markets were President Vladimir Putin's comments.

On Friday, Brent was nearly 1 percent down as it left levels of $61.58 per barrel. This is stark contrast to his statement two weeks ago, when Putin had said that Russian Federation would be okay with a $70 per barrel price. Gasoline futures prices dropped by 1.6% to trade at $1.3979 per gallon.

In other words, US crude inventories hit their highest level in a year after a tenth consecutive weekly increase, and are now only 80 million barrels below March 2017's record 535 million barrels, according to the Energy Information Administration. Analysts had predicted that inventories would go up by only 1 million barrels. The expectation had been that as maintenance in refineries began to wind down for the year, the market would see more draws.

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