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High oil prices ‘temporary’


KUWAIT: The rise in oil prices in the past few days will not last for long, as prices will remain between $40 to $50 per barrel for Brent crude oil, according to Kuwaiti oil analyst Dr Hassan Qabazard. The OPEC members’ agreement on limiting production rate, recently signed in Algeria led Kuwaiti oil barrel to rise by $2.7 on Monday, Qabazard, also CEO of Kuwait Catalyst Company (KCC) said yesterday. The weak performance of the US economy and dollar also had an impact on oil prices, said the official.

Meanwhile, he noted that prices will drop after a while due to a reduction in oil consumption, mainly in the Gulf region as weather temperatures cool and the need for air conditioning will be reduced. He added that consumption in Saudi Arabia drops about half a million barrels per day during this time period, while export is stable at about 7.5 million barrel per day. Qabazard said he was not optimistic on OPEC reaching a real agreement on reducing production rate.

He recalled the time between 2006-2013 when OPEC announced reducing production without actually committing to the deal. Countries that depend on oil as a main source of income have the need to raise production rate when prices go down. These countries include the Gulf states, Iran and Venezuela. Overflow of oil supplies around the world is currently between 1.5 to two million barrels per day, leading to inflation in oil reserves in industrial countries, which also affects prices, he said. The analyst added that the recent rise in shale oil production will play a role in reducing oil prices in the coming periods of time, by adding extra overflow of oil in markets.

Oil exports to Japan
Kuwait’s crude oil exports to Japan increased 6.7 percent in August from a year earlier to 6.32 million barrels, or 204,000 barrels per day (bpd), for the first rise in four months, government data showed. As Japan’s sixth-biggest oil provider, Kuwait supplied 6.4 percent of the Asian nation’s total crude imports, the Japanese Natural Resources and Energy Agency said in a preliminary report. Japan’s overall imports of crude oil declined 8.3 percent year-on-year to 3.21 million bpd for the second consecutive month of fall.

Shipments from the Middle East accounted for 84.7 percent of the total, up 2.6 percentage points from the year before. Saudi Arabia remained Japan’s No1 oil supplier, but imports from the kingdom plunged 18.6 percent from a year earlier to 978,000 bpd, followed by the United Arab Emirates with 818,000 bpd, down 6.0 percent. Qatar was next at 312,000 bpd, down 12.8 percent. Russia ranked fourth and Iran fifth, respectively. Japan is the world’s-third biggest oil consumer after the US and China, importing virtually all its fossil fuels.

Gold down to $1,309
Meanwhile, gold prices dropped to $1,309 per ounce early this week with five dollars difference compared to Friday, defying expectations for Q4 2016, Sabaek Al-Kuwait Company announced yesterday. Gold ended Q3 2016 with a rise of 23 percent compared to beginning of year, said sabaek’s CEO Rajab Hamid in a press statement. He added that gold saw a slight rise by one percent during this time period.

The slight rise was affected by the weak performance of the US dollar and the drop in American stocks, on the sidelines of the Federal Reserve’s decision to keep profit rates stable at the current time, he noted. Hamid expected gold prices to rise in the coming days, adding that the yellow metal is traded at a minimum of $1,305 and a maximum of $1,350 per ounce. The awaited release of US job market report for September will lead to a rise in US dollar rate and a drop in Gold prices to $1,300 per ounce, if data was positive. However, if we receive negative data, US dollar will drop and gold will exceed $ 1,350 per ounce, he added.

Demand on gold has risen in Q3 2016, compared to the same time period last year, mainly in East Asia. China and India, representing 55 percent of international market, were among the top countries in demand on gold and export of the yellow metal. As for silver, Hamid said it rose to $20 per ounce last week and dropped to $18.70 early this week. He expected silver prices to go up in the coming days due to a rise in buying operations and online trading. Meanwhile, demand on raw gold grew as the price of one gram dropped to about KD 12,850. Buying manufactured gold of 21 and 22 carats was also high due to the low prices. He added that one gram of gold rose from KD 10,450 early this year to reach KD 13 in Q3, expecting it to reach KD 13.10 in the coming days.- Agencies

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