Oil prices rally after OPEC meeting

Prices of oil were up as data released by Baker Hughes showed the U.S. oil rig count in the week ended on Sep 22 eased to 744 compared to 749 in the previous week.

The big unanswered question, though, is whether or not the OPEC/non-OPEC production cuts should be extended.

What is the outlook for oil as prices slip into bear market territory? There was a discussion about monitoring exports along with production but there was no concrete announcement on that front.

Elsewhere, in the USA, market participants mulled over data showing the number of oil rigs continued to decline, suggesting a possible tightening in domestic production.

"Nigeria is ready to reduce production at the level of 1 mln 800 thousand barrels per day and join the agreement once it reaches the target". Nigeria will be prepared to cap its crude production when it has stabilised at 1.8 million barrels per day, he said.

"Our conformity levels have continued to significantly improve and reached an unprecedented level of 116% in August!"

Some countries had expressed concerns about increasing output from Nigeria and Libya.

USA production has jumped back to pre-hurricane levels at 9.51 mbps but growth seems to have plateaued if the rig count is an indication.

This implies that WTI will have to remain in a structural discount to Brent is order to clear rising USA crude supplies.

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Fund positioning in gasoline, heating oil and gasoil now looks very stretched, with the ratio of long to short positions near multi-year highs in each case.

The meeting participants expressed satisfaction with the level of implementation of the oil cut deal, while further oil cuts were among the topics of the talks.

On the inventory side, USA oil inventories have been increasing for the past three weeks as the Hurricane impacted refinery demand. China is on pace to overtake the U.S. as the world's biggest oil importer this year, taking in more than 8 million barrels a day. Crude oil stocks usually grow this time of year because refineries shut down for seasonal maintenance. This caused prices to fall as low as $29 in January 2016.

Distillate inventories fell again this week, by 4.527 million barrels.

Rising Global Demand The adage that low prices cure low prices.

According to the Financial Times, Kurdish exports have risen strongly since 2014, which has allowed the Kurdistan Regional Government to plan for independence from Iraq, despite resistance from the US, Turkey and Iran.

The WTI curve has also flattened in the last couple of weeks indicating a bullish market. In fact, reporting agencies like the International Energy Agency warned that demand would not be strong.

But, as I wrote here, that boost to demand growth comes entirely from a downward revision to last year's oil use, not an increase in how much the IEA thinks the world will consume this year. "The Utorogu Non-Associated Gas 11 plant was also completed recently adding 150 mmscfd; the Oredo 2 gas plant also adds 100 mmscfd and the successful re-entry of Odidi which led to an addition of 40 mmscfd of gas indeed represents a major achievement for the company and a step forward to achieving NPDC's aspiration to become a serious global player in the E & P industry", Mr. Matashi averred. United States refinery utilization rebounded to 83.2 per cent last week after dropping to 77.7 per cent after the Hurricane struck. The shale boom "flash in the pan" will flare out and the world will return to "normal", with incremental demand to be met from the core Opec countries and Russian Federation once more. WTI prices sustaining above $50 will further support technical buying. U.S. crude for November delivery was up 41 cents at $51.07 a barrel, close to recent four-month highs, CNBC reported.

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