2016 sees biggest gain in oil prices
Oil prices attained biggest annual gain since 2009 after OPEC and partners agreed to cut output to reduce a supply overhang that was responsible for lower prices for two years.
A two-rig rise in the oil rig count in the United States, the ninth weekly increase in a row, as reported by oilfield services provider Baker Hughes Inc (BHI.N), added to bearish sentiments. [RIG/U]
But the total count of 525 for the week, the last for the year, was still below last year’s level by 11 rigs.
President Elaine Levin of Powerhouse, an energy-specialized commodities broker in Washington, said “Some profit-taking … very light trading – a lot of people have already done what they needed to do for the year.”
As the largest annual gains since 2009, Brent rose 52 percent this year and WTI climbed around 45 percent. However, the benchmarks rose 78 percent and 71 percent respectively, reports finance.yahoo.com.
Oil prices have slumped since the summer of 2014 from above $100 a barrel. The price rout, due to an oversupply thanks in part to the US shale oil revolution, was accentuated later that year when Saudi Arabia rejected any deal by the Organization of the Petroleum Exporting Countries (OPEC) to cut output and instead fought for market share.
But a historic OPEC agreement struck over three months from September that will reduce production from January 1, marked a return to the 13-country group’s old objective of defending prices.
Igor Yusufov, founder of the Fund Energy investment firm and a former Russian energy minister, said the rise in prices can be seen as “proof of international credibility,” for OPEC and partners.
He said the rise, a “ponderable New Yew present” for producers, is propelled by expectations of oil demand growth.
Analysts at JBC said major forecasters diverge on their specific predictions.
“We see a big variation in demand growth assessments for 2017, ranging from +1.22 million bpd (barrels per day) … to +1.57 million bpd,” they said in a note to clients.