Following a couple of weeks with falling prices, the crude oil market found some momentum Thursday. The price on a barrel of oil rose by 1.20 USD per barrel during the day and close at 57.00 USD/bbl.
There were several reasons behind the upside. Firstly, the world’s two top oil producers, Russia and Saudi Arabia, have had a summit in Moscow this week, where the Saudi King Salman and the Russian President Putin among other things have discussed oil production and export. Even though no formal agreement was signed between the countries, both parts could announce that they had agreed on prolonging the current production cut deal which includes both OPEC and non-OPEC countries. In total, Russia and Saudi Arabia produced 21 million barrels of oil per day in 2016, equaling more than 25 % of the total global production.
Furthermore, the market once again reacted to extreme weather conditions yesterday. Several hurricanes have hampered oil production in the US and the Caribbean during the autumn and the most recent forecasts show that another hurricane is now threatening. Nate, who is currently “only” ranked as a tropical storm” is right now in the Mexican Gulf where it is threatening oil production.
The two news affected the oil market during Thursday and the upside also caused coal and gas prices to edge up. Friday, the market does however adjust a bit downwards again, and it seems questionable if we will return to the price level from September, where the oil price reached the highest level seen for more than two years.