Crude oil prices have finally risen above $50 per barrel for the first time since the end of June on Thursday.
This continues a trend that has seen prices climb over 20% since the beginning of August, raising hopes that oil has finally left its all-time lows.
However, analysts remain concerned that the market may be overreacting, especially since talks between the Organisation of Petroleum Exporting Countries (OPEC) and other major producers are unlikely to lead to any cuts on production levels.
Crude Oil Prices Finally Enter Bull Market
The recent rally in crude oil prices started last week, after the Saudi energy minister Khalid Al-Falih said the OPEC would meet in Algeria next month to discuss measures to stabilise oil prices.
This week, data from the US Energy Information Administration (IEA) showed that both crude and gasoline stocks had suffered their first decline in a month, pushing prices up.
The last OPEC meeting in Doha did not result in any supply cuts
The prospect of output cuts, together with the fall in US crude supplies and a decline in the US dollar, have all helped boost crude prices.
OPEC Meeting Outcome Uncertain
Saudi Arabia, OPEC’s top oil producer and major non-OPEC producer Russia have both shown interest in taking part in the production talks.
However, Iran has reiterated its plans to raise production to the pre-sanction levels, increasing concerns that the meeting will actually result in any concrete measures to stabilise prices.
This is mainly due to the fact that a previous attempt to reach an agreement at an OPEC meeting in Doha failed, after Iran refused to join.
As Saudi Arabia stood off the agreement after Iran’s refusal, many doubt that it won’t do the same this time round.
The collapse in oil prices has been particularly hurtful to producers like Iran and Venezuela, who need high oil prices to balance their budgets, while some Gulf exporters are able to support low production costs.