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Oil Prices Climb Above $45 on Libya, Nigeria Talks

July 11, 2017 at 16:47 by Andrew Moran

Oil futures are surging on Tuesday as new reports suggest that there are negotiations to limit Libya and Nigeria’s production levels. Investors have started to remain cautious on global crude prices, but that may change if Organization of the Petroleum Exporting Countries (OPEC) can curb supplies beyond the oil cartel’s recent nine-month extension.

August West Texas Intermediate (WTI) futures rose $0.74, or 1.67%, to $45.14 per barrel at 16:31 GMT on Tuesday on the New York Mercantile Exchange. US crude prices are trying to rebound after last week’s massive 4% plunge.

Brent, the international benchmark for oil prices, is also rallying. September Brent crude futures jumped $0.73, or 1.56%, to $47.61 a barrel on London’s ICE Futures exchange.

Reportedly, OPEC officials are talking with the Nigerian and Libyan leadership over potential output limits. With the two nations exempt from the group’s nine-month extension of freezing production levels at 1.8 million barrels per day (bpd), Libya and Nigeria have accelerated their oil output, which has irked the likes of Russia and Saudi Arabia.

OPEC has reached 97% compliance, down from 100% in May.

Meanwhile, the US Energy Information Administration (EIA) has released its new 2017 and 2018 forecasts for oil prices. The EIA projects that oil prices will average $48.95 a barrel in 2017, down 3.6% from its original forecast, and $49.58 a barrel, down 7.5% from its original forecast. The EIA will publish its weekly oil market report on Wednesday.

Several banks have also slashed their expectations for oil prices. Goldman Sachs sees US crude plummeting to under $40 and Barclays anticipates Brent prices to be $48 next year.

The major declines in oil prices stem from US production contributing to the oversupply in the international oil market. US firms have seen their output spike by more than 10% to 9.34 million bpd over the last 12 months. The sluggish demand has impacted oil prices as some industry experts purport that US gasoline demand may have already peaked.

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