By Prince Okafor With Agency Report
West Texas Intermediate for December delivery yesterday rose by $1.19, or 2.6 percent, to $46.88 a barrel on the New York Mercantile Exchange.
The total traded volume was about 20 percent above the 100-day average. The more active January contract advanced $1.31 (2.8 percent) to $47.67 a barrel.
Brent for January settlement climbed by $1.35, (2.9 percent) to $48.21 a barrel on the London-based Intercontinental Exchange, ICE Futures Europe exchange.
The contract closed at $46.86 on Friday, capping a 4.7 percent gain for the week. The global benchmark traded at a 54 cent premium to January WTI.
According to the Head of energy commodities research, Barclays Capital, New York, Michael Cohen, “There’s a lot of jawboning from OPEC and market participants are positioning in response. We are paying attention to signals from the OPEC ministers as they try to finalize an agreement.”
Also, Goldman Sachs Group Inc said “it’s got a tactically bullish outlook on a stronger OPEC-cut rationale.”
Goldman Sachs sees WTI at $55 in both the first and second quarters of next year, compared with prior estimates of $45 and $50 a barrel, according to a note on Monday. It lowered third and fourth-quarter estimates to $50 from $55 and $60 a barrel previously.
“For the purpose of our oil-price forecast, our base case is now that an OPEC production cut will be announced and implemented with OPEC production at 33 million barrels a day in the first half of next year and a Russian freeze at 11.6 million barrels a day,” the bank said.
Recall that, Russian President Vladimir Putin had earlier told reporters on Sunday after attending the Asia-Pacific Economic Cooperation summit in Lima that, “whether an agreement will be reached, I can’t say 100 percent, but there’s a strong likelihood that it will be achieved.
“The main contradictions within OPEC, if they’re not yet eliminated, can be eliminated.”
He also said that he sees no obstacles to an OPEC agreement this month as he reaffirmed Russia is willing to freeze crude output at current levels.
“Russia has added more than 400 billion rubles ($6 billion) in projected budget revenue based on this year’s production talks, according to two officials familiar with the government’s calculations.”