Economy

Crude prices react to concerns of referendum in Kurdistan

Crude prices react to concerns of referendum in Kurdistan

Brent rose about 4% to just short of $60, its highest since July 2015, point, before dropping back to $58.59.

EIA also reported that refinery crude runs rose by one million barrels per day.

Even as both contracts rallied, concerns about US production growth weighed on WTI, widening the spread between the two, he said.

Turkey's repeated threat to cut oil exports from the Kurdistan region in northern Iraq pushed the price close to $60 a barrel on Monday for the first time since June 2015.

OPEC met on Friday to review the progress of their work over the past 9 months, assessing whether or not they should extend their current production cuts beyond the March 2018 expiration date.

The slow recovery of the oil market from twelve year lows at the beginning of 2016 has continued to frustrate traders as prices meander between $50 and $55 a barrel.

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The crude oil market which opened lower during the week regained its footing during Tuesday's session due to the bright market outlook that demand for crude oil prices to go up will rise as well as the reception of the OPEC producer's' recent compliance with the agreed upon deal to cut daily production as a part of their efforts to avoid global oversupply. That follows years of western markets and OPEC each having a leading role on the price and consumption of oil. United States oil inventories are back within the five-year range and are at their lowest since January 2016.

The 14-member OPEC, led by top crude exporter Saudi Arabia, will meet in Vienna at the end of November to discuss the possibility of extending production cuts and inviting other non-member oil producers to contribute to more cuts.

Major crude producers - OPEC and non-OPEC countries - agreed late previous year to cut production by about 1.8 million barrels per day for six months.

The big unanswered question, though, is whether or not the OPEC/non-OPEC production cuts should be extended. Prices have shot up about 15 per cent in the past three months.

Brent oil prices rose on Wednesday, hovering around a 26-month high hit in the previous session, after U.S. data showed an unexpected drop in crude stocks as refineries boosted output and amid threats from Turkey to cut crude exports from Iraq. Higher crude oil prices have a positive impact on oil and gas producers (RYE) (IEZ) like ConocoPhillips (COP), Apache (APA), and Chevron (CVX). Over the last month, gasoline demand averaged over 9.4 million barrels per day, up by 0.6% from the same period a year ago. The Department of Energy reported that over the last month product demand averaged 20.3 million barrels per day, up by 1.3% from the same period a year ago.

"It's pretty clear the Kurds are going to vote for independence and we will have yet another geopolitical hot spot in the Middle East that threatens a significant amount of oil supply", said John Kilduff, a partner at Again Capita.


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