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Crude Oil Rises amid Choppy Trading While Tension Heightens

November 28, 2016 at 20:57 by Vladimir Vyun

Trading was choppy today as futures for crude oil rose 2% following the drop by 2% earlier. Traders wait for the meeting in Vienna on November 30 planned by the Organization of Petroleum Exporting Countries. The OPEC hopes to reach an agreement for cutting oil production as a measure to bolster prices.

Iraqi oil minister Jabar Ali al-Luaibi voiced optimism for the upcoming meeting, but it is hard for most market participants to be optimistic considering that OPEC members do not show desire to make compromises necessary for reaching the deal.

Saudi Arabia refused to attend the meeting between OPEC and non-OPEC producers planned for Monday (which was subsequently cancelled), saying that there is no sense with speaking with producers outside of the organization until the OPEC members reach an agreement among themselves. The OPEC met instead for a preliminary discussion of cuts for individual members ahead of the November 30 meeting, but no conclusive decision has been made. What is more, Saudi Arabia said that output cut is not really vital and the market will balance itself without additional help.

Of course, most market analysts do not agree. Though an argument can be made that even the OPEC cuts production, resulting in a rise of prices, US shale producers will likely boost supply in a response to higher prices. This will leave the OPEC with the same low prices due to oversupply but also with smaller share of the market.

WTI crude oil for delivery in January climbed as much as 1.89% to $46.93 per barrel as of 20:42 GMT on NYMEX today. Futures for Brent crude advanced 1.76% to $48.07 per barrel on ICE.

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