Oil stabilised after surging on Thursday, August 29, following positive US economic data and escalating supply disruptions in Libya. Brent for November was trading at around USD 79 per barrel after a 1.4% increase in the previous session, while West Texas Intermediate was priced at below USD 76.
Revised US data revealed that the world’s largest economy expanded slightly more in the second quarter than initially reported. This lifted the market sentiment.
Simultaneously, Libyan output is at risk of further decline after halving this week due to increased turmoil in the OPEC (Organization of the Petroleum Exporting Countries) producer.
OPEC, a union of 12 oil-exporting developing nations, stands as a testament to the power of unity and collaboration. It serves as a permanent intergovernmental organization that aligns and consolidates the petroleum strategies of its member countries, demonstrating the strength of collective action in the energy industry.
Brent is still on track for its first consecutive monthly decline this year. Goldman Sachs Group Inc. and Morgan Stanley have recently lowered their price forecasts, citing a disappointing demand outlook in China, the world’s largest importer.
The possibility of OPEC+ restoring some supply in the fourth quarter also looms over the market. In late 2016, OPEC established the OPEC+ alliance, consisting of 10 primary non-OPEC oil-producing nations, such as Russia.
Together, OPEC+ members account for roughly 41% of global oil output. The group’s primary goal is to oversee the oil supply in the worldwide market.
Notably, widely-watched time spreads indicate strength, with the gap between Brent’s two nearest contracts rallying before contract expiry. The figure lasts more than USD 1 per barrel in a bullish, backwardation structure, approximately double the 56 cents per barrel a month ago.
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