Crude Oil Prices Recover On Strong Demand

Most oil prices were higher during Friday’s trading session despite the rising U.S. dollar due to the rising demand for crude oil in China which happens to be one of the biggest economies in the world as well as the global production cuts from the Organization of Petroleum Exporting Countries which will be extended until the end of 2018.

The Organization of Petroleum Exporting Countries, as well as Russia, announced on Thursday after the end of its annual meeting held in Vienna that they have agreed to once again extend their agreement to cut the overall production of crude oil until the end of 2018 as a part of their continued efforts in preventing a global oversupply.

This surprised most Wall Street investors who mostly predicted that Saudi Arabia and Russia, which is two of the biggest oil producers in the world, to eventually drop out from the deal. The announcement of the extended production cuts also included producing countries Libya and Nigeria. The two countries has been exempted from the agreements during the initial production cuts. The agreement was also initially signed to help curb oversupply is expected to boost oil prices further.

Some concerns from the market included Russia not pushing through with the deal as well as the ability of an oil production curb being extended helping oil prices to recover as the U.S. crude production continued to rally over the past quarter offsetting most of the gains which were incurred by the initial efforts of the OPEC cuts during the beginning of the year.

According to Khalif Al-Falih who is currently Saudi Arabia’s oil minister, the decision of the organization was unanimous with the members agreeing to cut around 1.2 million barrels per day from OPEC producers and a cut of 0.6 million barrels per day participating non-OPEC countries which will run from January next year until the end of 2018.

Earlier this week, however, oil prices edged down due to market concerns on the growing fuel stocks in the United States and reports of a weaker demand for crude products. During the prior week, oil prices were also down by as much as 2% also due to the growing crude production in the United States.

Despite the slight decliner earlier in the week, oil prices recovered and were mostly stable on reports of higher demand in China as well as the positive outlook led by the OPEC production cuts.

Brent crude futures rose up by 0.1% to trade at $62.27 per barrel while the U.S. West Texas Intermediate traded at $56.70 per barrel mostly stable from its recent prices during the previous trading session.

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