WTI oil increased as the leader of OPEC not only sustained production but increased the price to Asian markets.
With market charts for WTI showing the day’s range from $49.47 to $50.58 and oil currently standing at $50.30 at end of Asian trading, the commodity is in a good position for trading on Monday.
The rise of $1 a barrel is due to Saudi Arabia increasing crude prices to Asia for the second month running as the OPEC leading country finds demand in its biggest market. From last week’s fall of nearly 5% on Brent, dropping from highs of $57.66 to lows of $53.98, Monday morning gains have reversed prices with the bulls pushing Brent to $56.85 by 8.00am GMT.
Saudi’s pricing position has been to keep the cost down to maintain market share, revealing that even $40 per barrel would not be a problem. However, for the Asian market, Saudi Aramco raised its May price for Arab Light grade by $0.30 a barrel compared with April. The commodity is still being sold at a discount but now at only $0.60 a barrel.
Developments around the Iranian talks also impacted on oil prices as last week Iran met with 6 world powers to come to a framework agreement on its nuclear programme. On Thursday the parties announced a preliminary deal. With an agreement will come a relaxing of sanctions, allowing an additional 1 million barrels a day to be exported from Iran onto an already glutted market. If the sanctions on Iran are dropped, Societe General analysts were reported to predict that oil may plummet another $5 per barrel though the impact will probably be slow to take effect.
Meanwhile, in another OPEC country, Libya, the prime ministers’ government has announced a new plan of independent oil sales with any revenues being deposited in the United Arab Emirates to avoid the clutches of a self-imposed administration in the country who took over Libya's central bank and National Oil Corporation in Tripoli last year.
Fighting and bombing still prevails in Libya where two administrations are vying for power. At present, Libya produces approximately 600,000 barrels of crude per day, and though several oil ports and major fields have been closed by the warring factions, the two biggest oil ports, Ras Lanuf and Es Sider, which have a combined capacity of 600,000 bpd, may soon open and push yet more crude onto the already volatile market.
MT4 chart: BrentOil
MT4 chart: Oil [WTI]
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