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Oil Futures Climb 3% over OPEC Supply Freeze Speculation

August 8, 2016 at 17:31 by Andrew Moran

Oil futures are rising on Monday after it was speculated that Organization of the Petroleum Exporting Countries (OPEC) members would start to freeze their production efforts. This comes as reports increasingly project that there will be a major oil supply glut on global markets.

September West Texas Intermediate (WTI) crude jumped $1.22, or 2.92%, to $43.02 per barrel at 16:59 GMT on Monday on the New York Mercantile Exchange. US crude prices have gradually recovered since declining to under $40 early last week.

October Brent crude also climbed $1.13, or 2.55%, to $45.40 a barrel on London’s ICE Futures Exchange.

For the last three trading weeks, oil prices have been slumping due to concerns about an oversupply of oil on international markets. Reports from all over the world have suggested that an immense supply glut is coming within the next few months. This is something that could start to weigh on prices.

After it was speculated on Monday that OPEC members would freeze their oil output, oil futures began to go up again. OPEC members are ostensibly worried about lower oil prices becoming the norm again.

The likes of Ecuador, Kuwait, and Venezuela are urging OPEC and non-OPEC oil producers to start negotiating new limits for oil production. This, proponents say, would help push up oil prices, which would benefit a nation like Venezuela, a country on the brink of collapse. OPEC did try to pass this motion in April, but the initiative ultimately failed when Saudi Arabia and Iran walked away from talks.

Countries in favor of a production limit may already be disheartened. Russia, the world’s biggest oil producer, dismissed the measure. Energy Minister Alexander Novak noted that oil prices are at or near normal levels and limits would not be needed, but added that Russia would still be open to talks.

Qatar Energy Minister and current OPEC President Mohammed bin Saleh al-Sada said that OPEC is in constant deliberations and pays very close attention to the developments in the oil markets in order to stabilize prices.

OPEC members are scheduled to hold informal meetings in Algeria from September 26 to 28.

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