US oil futures have remained at over $50 a barrel on Friday. The increase in futures is in accordance with the general crude oil prices that have risen in a display of confidence in the sector by financial markets. U.S. West Texas Intermediate (WTI) futures CLc1rose by 3 cents to $50.47 a barrel Friday morning, up from the $50.44 of Thursday closing. This is the first $50 plus settlement since the end of June.
Brent US oil futures LCOc1 had reached over $50 earlier in the week and traded at $52.55 a barrel Friday – up 4 cents from Thursday closing. The forward curve for each is in contango (crude oil futures price higher than spot price) which means that all the crude futures are back to over $50 a barrel.
Due partially to OPEC’s agreed reduction in crude oil production, this upward trend should carry on for a while. How much of a while may depend on OPEC members, although the USA has been reducing crude stocks for five straight weeks.
Oil stocks in the U.S. are now at their lowest since January. This is the first month since then that stock has been below 500 million barrels. This is one of the reasons for crude oil prices being on an upward trend.
OPEC hopes to continue this trend at its November 30 meeting in Vienna, Austria. OPEC (Organization of the Petroleum Exporting Countries) plans to get an agreement for a production cut by all members at this meeting. The objective to remove the surplus crude oil stocks that have been responsible for depressing crude oil prices over the past two years.
There is another energy conference next week when OPEC and non-OPEC oil producers can discuss how to tackle the current crude glut and price issues. Saudi Arabia announced a price cut this week for its benchmark crude to Asia. How much of the current increase in crude oil prices are seasonal is also a matter for debate.
The West uses more fuel in winter, so there is more call for it. This is a significant factor in fluctuating oil prices between Asia and the West. However, the current situation is optimistic while US oil futures and crude oil prices are on an upwards trend. The November meeting will be critical in cementing this optimism.