Oil prices have been witnessed to increase by 12% amid speculations of a possible production-cut deal amongst Russia and Kingdom of Saudi Arabia (KSA) as well as other OPEC nations. The average oil price has dipped well below $30 a barrel on Thursday, which has been reported to be sold at $31 on Friday.
Sharp fall of oil prices on Thursday has been analyzed as the triggering factor for some bargain hunting by some traders. However, KSA poses as the key factor for the production cut deal. This is due to the desert nation's large reserves and its ability to increase or decrease production to affect the world market acting unilaterally, according to a report published in the Voice of America.
Suhail Mohammed Faraj Al Mazroui, Energy Minister for the United Arab Emirates has been quoted to highlight readiness of the OPEC members in reducing output. Meanwhile, Eulogio Del Pino, the Venezuelan minister has confirmed for approaching towards a deal aiming to reduce oil production, reports BBC.
Oil prices have hit a 12 year low with 75% price slump since mid 2014. The price rising has been assumed sooner or later due to tightened production or increased demands. It has been expected to raise up to $50 a barrel by the end of the year, forecasts CNBC citing a Commerzbank note as the source.
The crude oil has been reported to be sold at $26.05 a barrel on Thursday in the US crude market. The price has been soared by 12% to $29.44, the highest one day increase since 2009.
However, some analysts still expects wilder price to swing in the coming weeks. ABN Amro, senior energy economist for Hans Van Cleef has been reported to forecast for a period of high volatility ahead. KSA doesn't want to see much competition and risk for losing market share. Acting on this intention has posed the desert kingdom to be recognized as the most important nation in the fossil fuel market. The U.S. Energy Information Administration has revealed that the United States has even greater proven oil reserves than the KSA. The revelation accounts the deep shale oil deposits of the US. oil has also got a boost from a rally in equity markets, with both U.S. and European shares rebounding from recent weakness.
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