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Price of crude unlikely to rise above $53/bbl

Last week the price of WTI rose 1.7% and reached $50.88/bbl. The expiration date for the futures’ price was October, 24. On October, 19, the price reached its new quarterly high of $51.54/bbl. We forecast that the price is unlikely to fall below the level of $50/bbl unless OPEC’s members again fail to agree at their meeting on November, 30.

WTI futures price, August, 15 – October, 24, 2016

The price of Brent crude oil has risen in the recent week by 1.9% to $52.58/bbl, and is unlikely to fall below$50-51/bbl. The spread between the price of Brent and WTI decreased to $1.7 because volatility on the crude oil market is looking to fall.

Brent futures price, August 15 – October, 24, 2016

Baker Hughes reported that the number of active drilling rigs rose by 11 units to 443 rigs last week. OPEC representatives have been expressing different views about the future freeze of oil production. While Saudi Arabia, Venezuela and Russia - who is not a member of OPEC - have agreed to freeze the production of crude, Iraq, Libya and Nigeria object to such a decision. Therefore, the price of crude oil is unlikely to rise above the level of $53/bbl before November, 30. We expect the prices of Brent and WTI next week to be in a range of 51-52.5/bbl.

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