Brent Crude Oil Hits New 2017 High

Still, CHS Hedging's Headrick said "the USA oil producer has proven to be very resilient in the face of lower prices". That news was greeted with big smiles - if not wild cheering - by oil ministers meeting in Vienna to discuss the effectiveness of their output deal.

Additionally, remember that the hedge funds tend to get ahead of the fundamentals so it is possible they could overbuy, stopping the rally.

However, analysts at JBC Energy said that much of the rebalancing seen so far in the markets has been happening on the product side more so than in crude stocks, with forward cover in global middle distillate stocks, for example, having fallen below the five-year average in August.

"We, therefore, acknowledge with deep appreciation the exemplary conduct and leadership of over-conforming OPEC countries, Saudi Arabia, Angola and Equatorial Guinea, as well as over-conforming non-OPEC participating countries, Azerbaijan, Brunei and Sudan, in continuously restraining themselves and sacrificing in the interest of all".

Members estimated that compliance to output cuts was in excess of 100 per cent in September and that the oil market is recovering strongly.

And there you have it.

Investigations showed that the price of oil may stabilise in excess of $55 per barrel in the fourth quarter, especially as many stakeholders, particularly Russia, Azerbaijan, Brunei and Sudan, have chose to support the efforts of OPEC in achieving stability. "The information reason - a series of hurricanes and their consequences in the United States - has already exhausted itself, and other information reasons for raising oil prices are not expected now", he explained. "We have the tap", Erdogan said.

Oil pricing agency S&P Global Platts said on Thursday it planned to publish USA crude prices at the close of the Asian trading day starting in December as US exports to the region have risen.

The 14-member Organization of the Petroleum Exporting Countries (OPEC), led by No. 1 crude exporter Saudi Arabia, is expected to discuss in Vienna on Friday a range of price support options for oil with non-OPEC members led by Russian Federation, the world's largest crude producer.

However, there is a limit to how much WTI can rise relative to Brent before sending US crude to the East is no longer economically viable.

Emmanuel Kachikwu, minister of state for petroleum resources, who led Nigeria's delegation to the meeting, argued that though Nigeria's production recovery efforts have made some appreciable progress since October previous year, Nigeria is not yet out of the woods.

But there is a sting in the tail.

"Fear in the market has been that OPEC production will rise dramatically", said Morse.

Other signs there could be a restriction in oil supplies has also been pushing up prices. It is good news for the Nigerian economy as the price of crude oil stood at $54.59 per barrel.

The large concentration of hedge fund long positions in gasoline, heating oil and gasoil could presage a sharp correction at some point if fund managers try to realise some of their profits.

  • Rogelio Becker