Oil prices rise on Saudi
optimism over OPEC deal
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[November 17, 2016]
By Christopher Johnson
(Reuters) - Oil prices rose on Thursday as expectations of an OPEC deal
to limit production outweighed evidence of global oversupply and rising
inventories, particularly in the United States.
Saudi Energy Minister Khalid al-Falih said he was optimistic OPEC would
formalize a preliminary oil output deal reached in Algeria in September.
"I'm still optimistic that the consensus reached in Algeria for capping
production will translate, God willing, into caps on states' levels and
fair and balanced cuts among countries," he told Saudi-owned Al-Arabiya
Falih said he believed the market was on its way to becoming balanced
and that an agreement by the Organization of the Petroleum Exporting
Countries at its meeting in Vienna on Nov. 30 would speed the recovery.
Brent crude oil <LCOc1> was up 80 cents a barrel at $47.43 by 1255 GMT
(7:55 a.m. ET). U.S. light crude <CLc1> was up 75 cents at $46.32.
U.S. crude inventories rose by 5.3 million barrels in the week to Nov.
11, well above forecasts of an increase of 1.5 million barrels, data
from the U.S. Energy Information Administration showed on Wednesday. [EIA/S]
Stocks are also rising elsewhere, thanks to record output by OPEC, which
pumps around 40 percent of world oil supply.
"The name of the game is 'volatility' as confusing signals are arriving
before OPEC meets," said Tamas Varga, senior analyst at London brokerage
PVM Oil Associates.
"We have evidence of oversupply - U.S. stocks rising - versus hopes for
some action by OPEC."
Venezuelan President Nicolas Maduro said on Wednesday OPEC countries are
ready to reach a "forceful" agreement on cutting oil output. Maduro met
OPEC Secretary-General Mohammed Barkindo in Caracas to discuss a
possible OPEC deal.
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Vessels pass an oil refinery in the waters off the southern coast of
Singapore, February 26, 2016. REUTERS/Edgar Su/File Photo
Russia has also expressed willingness to support an OPEC decision to
freeze output, Russian Energy Minister Alexander Novak said.
But rising oil production and changing fundamentals "make a credible
OPEC cut all the more difficult to achieve", Jason Gammel, analyst at
U.S. investment bank Jefferies, said.
"The physical market has shifted back to oversupply because of surging
OPEC output, with the most material increases driven by improving
security conditions in Libya and (tenuously) Nigeria," he said.
Jefferies expects Brent to average $58 a barrel next year.
(Additional reporting by Mark Tay in Singapore; Editing by Dale Hudson
and Adrian Croft)
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