Crude prices jump up to 11.54pc, biggest weekly gain since October

Author: Monitoring Desk

Oil prices surged up to 11 percent last week, their biggest weekly gain since October last year, as Gulf of Mexico oil operators shut the production ahead of a hurricane expected to pass through the Gulf in the weekend. According to details, Brent, the international benchmark for two-thirds of the world’s oil, gained 11.54 percent during the week to reach $72.70 a barrel. Similarly, the US West Texas Intermediate (WTI) reached $68.74, up by 10.62 percent during the week.

During the week, the price for Opec Basket surged to $70. 75 with 7.06 percent increase, Arab Light price increased 7.43 percent to $72.81 a barrel, while the price of Russian Sokol jumped 7.57 percent to reach $71.48. A weaker US dollar and crude and gasoline inventory draws, as estimated by the EIA, supported oil prices. However, the oil market is looking at the OPEC+ meeting scheduled for September 1 (Wednesday), which will determine the future course of action for prices. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+, will discuss the previously agreed increase of 400,000 barrels per day (bpd) for the next several months. Analysts are divided over the outcome of the meeting as ING strategists Warren Patterson and Wenyu Yao told oilprice.com on Friday that they don’t expect any change to the production policy and continue to believe that OPEC+ will ease supply cuts by 400,000 bpd in September.

“OPEC+ will take some comfort in the fact that we have seen a fairly swift recovery in oil prices from the lows of last week,” they further said.

On the other hand, Kuwait’s oil minister told Reuters on Sunday that the increase in oil output agreed last month by OPEC+ nations could be reconsidered at its meeting.

“The markets are slowing. Since Covid-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 (bpd) increase,” Mohammad Abdulatif al-Fares told Reuters on the sidelines of a government-sponsored event in Kuwait City. Economies of East Asian countries and China remain affected by Covid-19 and caution must be exercised, Fares added.