"This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria and a lower rate of compliance by OPEC with its own output agreement".
"We (OPEC) are fairly in consensus on our position on cuts", he said, adding that OPEC hoped oil prices would stabilize later this month.
The dollar struggled against most of its primary trading partners, trading at $1.1477 against the euro and 113.62 against the yen, a 0.26 percent decline against the Japanese currency. It's the lowest level since the agreement came into force in January.
The average external break-even masks significant variations between oil exporters, however, with Libya at one end of the spectrum requiring $140 a barrel and Norway needing just $20.
In its sector update note today, the research house sees that at US$50 per barrel, major oil companies can initiate a restart to their capex plans, considering the lower cost of production and better efficiencies attained in recent times.
The IEA, which advises industrialized nations on energy policy, said strong demand growth in the second half of 2017 and in 2018 should nevertheless speed up market rebalancing.
"U.S. inventory numbers confirmed that a drawdown (of excess inventories) was in train", ANZ bank said.
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Kachikwu expressed the hope that oil prices may stabilise later this month or in August and that conversations with other OPEC members would determine to what extent Nigeria would have to support in stabilising crude prices globally.
As oil price weakens, so does high yield, and vice versa, but as Warren Estey, head of America's natural resources at Deutsche Bank sustained, increased volatility means less room for errors when markets become more efficient, even if the eventual profits can be sky high.
OPEC members are having trouble keeping their promises.
A coalition of 24 OPEC and non-OPEC countries including Russian Federation have been throttling their output since January to prop up prices. For 2018, total demand is forecast to hit 100 million barrels a day in the third quarter and average 99.4 million barrels a day for the full year.
EIA forecasts total US crude oil production to average 9.3 million b/d in 2017, up 0.5 million b/d from 2016. If Libya and Nigeria do not experience any more disruptions due to violence or political instability, it is very likely that these countries will have no choice but to comply with the production cut. The EIA reported another 7.6 million barrel oil draw. We do not expect any drastic changes next week: bunker prices may continue swinging with no firm trend.
The number of rigs in operation has more than doubled from May 2016.