Following Opec production cut and Brexit Fuel prices surged in UK

According to reports the petrol and diesel rate in the UK has surged to its highest since July 2015, after a three-pence-a-litre rise in December alone.

The average rate of unleaded petrol hit 117.23p at the end of December, with diesel reaching 119.63p, the RAC said.

Meanwhile the wholesale price of both fuels has increased significantly, following the production cuts declared by Opec.

Brent crude surged by 10% on 30 November, the day the cartel publicized a cut of 1.2 million barrels a day.

Consequently, the oil price is now twice more than what it was a year ago, rising from a bottom of $27.88 in January 2016 to more than $55 this month.

Furthermore the drop in the price of sterling since the Brexit vote has also helped in increasing UK fuel prices, as oil is priced in dollars.

Over the fortnight, the RAC predicts the price of unleaded to go up to 118p, with diesel going up to 121p a litre.

Subsequently, the price will be mostly determined by the cost of oil and whether Russia in specific will follow the production cuts it agreed with Opec.

Russia vowed to cut 600,000 barrels a day from January, but in the past it has been unwilling to co-operate with such deals.

“So far the price rises we’ve seen are purely down to the announcement at the end of November that Opec and non-Opec countries would be cutting oil production this month,” said Simon Williams, a fuel spokesperson for the RAC.

In near future, the price of fuel will also be determined by political measures, such as strategies announced by President Donald Trump, and the success of Brexit talks, which are due to begin in March. Both these major events could influence the value of sterling against the dollar.

According to experts the price of oil could also go up to $60 a barrel or more by the end of 2017.

Non-OPEC oil producers settled to cut output following last month’s OPEC deal

Reports said that prices rose 4% on Monday after oil-producing countries agreed to cut production, a move planned to push the overstocked oil market into a rebalance, or even a shortfall, to sustain a crude market that had been stuck in a two-year slump.

Brent crude, the global oil benchmark, rose $2.34, or 4.3%, to $56.67 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up $2.42, or 4.7%, at $53.92 a barrel.

Meanwhile a group of massive producers outside of the Organization of the Petroleum Exporting Countries, like Russia, decided to scale back their production by 558,000 barrels a day. The move would come on top of the slash of 1.2 million barrels a day settled to by OPEC in late November. The total cut signifies almost 2% of the worldwide supply.

Furthermore this agreement is seen as a plume in the cap for Saudi Arabia the oil cartel’s de facto leader and the world’s largest crude producer.

The non-OPEC cuts, if go through over the first half of 2017, would exemplify an unusual level of cooperation among oil-producing countries that have been examining for ways to lift oil prices out of a two-year slump.

“This is truly a historic event,” Russian Energy Minister Alexander Novak said. “It is the first time that so many oil-producing countries from different parts of the world have gathered in one room to accomplish what we have done.”

Moreover the largest chunk of the cuts, which is 300,000 barrels a day have been vowed by Russia, which produces more crude oil than any other country. Other output cuts are assured by 10 other countries, including Oman, Azerbaijan and Sudan.

OPEC meeting close but not many optimistic on agreement

Crude futures bounced back on Wednesday, on the hope that the Organization of the Petroleum Exporting Countries (OPEC) will settle an agreement on production cuts.

Later today An OPEC deal is planned at cutting into a global glut of oil that has rigorously lowered prices since 2014.

Analyst’s suggested if OPEC settles a deal on production, prices could rise to the low-$50-a-barrel range. In case of failure, oil prices could come down below $40 a barrel.

In the recent years OPEC leaders have been trying to settle on production restrictions, but these attempts have been unsuccessful. In April, this year OPEC leader Saudi Arabia rejected take part in a deal after it asserted that all members agree on production cuts, which didn’t happen. Saudi Arabia is likely to make the similar demand this time around.

One of the major sticking point is strain between Iran and Saudi Arabia in today’s summit in Vienna. Despite the fact Iran has relaxed its position by supportive to hold production levels down, which is indeed a step back from a previous plea, it remains to be perceived whether Saudi Arabia will be happy or not.

Meanwhile another hurdle could be Iraq’s request for omission from the deal, saying it would only go as far as plugging production at existing levels. Iraq claimed it requires the oil money to fight its war against Islamic State.

In the New York Mercantile Exchange, light, sweet crude futures for delivery in January recently traded at $45.51 a barrel, up $0.28 in the Globex electronic session. January Brent crude on London’s ICE Futures exchange surged $0.44 to $46.82 a barrel.

ROSNEFT OIL CO followed the market trend by posting downbeat earnings

Russian giant, ROSNEFT OIL CO announced its quarterly results, with 77% drop in third-quarter profits as a result of plunging oil prices.

Meanwhile its net income for the period was $400.7 million, which was way less than the earlier predictions.

Russian government, which is the owner of around three-quarters of Rosneft, announce drecently that it is ready to sell a 20% stake in the company as a part of a money-raising privatization program. 20% of Rosneft is already owned by the UK-based oil producer BP.

According to reports, the sale of the stake is going to make £9 billion for the cash-strapped Russian government, whose income was badly hurt because of the fall in oil prices.

One of the world’s largest oil company Rosneft’s chief executive, Igor Sechin, said the “environment on the commodity markets remained difficult” during the latest quarter of the year.

Not just Rosneft, most of the world’s biggest oil companies have been posting lower profits as the sector find it hard to fight against low crude prices.

Furthermore BP also posted a way lower than expected third-quarter profits, while US giant Exxon announced earnings coming down almost 40%.

Commodities rates was at almost $115 a barrel in the summer of 2014, but then big slump came due to the misjudged gap between supply and demand.

Last month, publication that the Opec oil producers’ cartel had a consensus on a limit of production, sent the oil price to its uppermost in a year, with Brent crude growing above $53 a barrel. Nevertheless, worries over whether Opec will be able to implement production cut have seen prices came down recently.