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Crude prices jump on IMF forecasts on world economic growth

24 January 2018 11:01 (UTC+04:00)
Crude prices jump on IMF forecasts on world economic growth

By Sara Israfilbayova

World oil prices rise on Tuesday morning on the forecasts of the International Monetary Fund (IMF) on the growth of the world economy.

Brent crude futures were up 28 cents at $69.31 a barrel, not far off the three-year high of $70.37 reached on January 15, U.S. West Texas Intermediate (WTI) crude futures rose 33 cents to $63.90 a barrel. WTI reached its highest since December 2014 on January 16 at $64.89, Reuters reported.

On January 22, the IMF improved forecasts for the growth of world GDP for 2018 and 2019 by 0.2 percentage points - up to 3.9 percent, as compared with the October estimate. Analysts of the fund said that the improvement in the forecast was affected by “unexpected surprises in terms of growth (economies), which were especially evident in Europe, Asia ... in emerging markets and in developing groups of economies.”

According to traders, the oil market as a whole is well supported by healthy economic growth, writes Reuters.

In the long run, investors are preparing for large-scale changes in the demand for oil, caused by the growth in demand for electric vehicles.

Crude prices are supported by Saudi Energy Minister Khalid al-Falih’s comments, following a meeting of the ministerial committee of OPEC + in Oman. According to him, the main countries participating in the Vienna agreement on the reduction of oil production are determined to continue cooperation after the agreement is concluded this year.

At the same time, the balance of supply and demand in the oil market is projected to recover in late 2018 - early 2019.

In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan, and South Sudan agreed to reduce oil output by 558,000 barrels per day, including Russia by 300,000 barrels per day, starting from January 1, 2017 for six months, extendable for another six months.

OPEC and its allies reached an agreement on prolongation of the deal until the end of 2018 on November 30 in Vienna.

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