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Crude Oil Rallies amid Renewed Optimism for OPEC Cuts, Natural Gas Joins Rally

October 27, 2016 at 21:27 by Vladimir Vyun

Futures for crude oil rallied today amid renewed optimism about the output cut deal proposed by the Organization of Petroleum Exporting Countries. Reuters reported that, according to the sources familiar with the matter, Saudi Arabia and its Gulf allies signaled to Russia that they are going to cut 4% from their peak production. Yet the deal to reduce production will not be finalized before November 30 when the OPEC meets in Vienna, and until then everything can change, especially as many OPEC members want to be exempt from output cuts. December futures for WTI crude oil rose 0.87% to $49.61 per barrel as of 21:11 GMT on NYMEX today. Contract for Brent crude advanced 0.76% to $50.36 per barrel on ICE.

Prices for natural gas rose as well even though supply data released by the Energy Information Administration was not bullish strictly speaking. The EIA reported that US inventories of gas rose by 73 billion cubic feet last week. While it was a smaller build-up than the prior week’s 77 billion, the increase was above the forecast 71 billion. The commodity remains under pressure from warm weather in the United States that limits demand for the heating fuel. Contract for delivery of natural gas in November climbed 1.21% to $2.76 per million British thermal units on NYMEX today.

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