OPEC Seen Maintaining Its Output
Brent crude oil traded steadily on Monday, holding on to Friday's gains as a US government deal that would temporarily raise the country's borrowing authority and avoid default on October 17 was looking more and more likely.
Brent traded at $111.19 at 4:32 GMT as US lawmakers entered into the final week until their stalemate would have lasting repercussions across financial markets.
After Republican lawmakers proposed a temporary extension that will keep the government running for six weeks in return for President Obama's willingness to negotiate budget items last week, most are expecting to see a deal from Washington early this week. A deal would lend support to Brent prices as the shutdown was seen as depressing the number one oil consuming nation's appetite for crude.
CNBC reported that UAE energy minister Suhail bin Mohammed al-Mazroui said that OPEC is not planning on changing its output at the organization's meeting in December. Mazroui said there was no need to increase production and that the group would ensure that the market remains well supplied.
OPEC also lowered its forecast for the final quarter of 2013 and also for 2014 in a report which stated that expected global demand falls below production despite a reduction of Iraqi and Libyan crude exports.
Mazroui also commented that the cartel was happy with a price of $100 per barrel, the budget breakeven point for many of OPEC's members.
Moving forward investors will be closely watching the US for developments in the budget showdown. Once Congress reaches an agreement, the US Federal Reserve is likely to step back into the driver's seat as oil prices will again hinge on whether or not the bank plans to begin tapering its bond buying program.
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