On Thursday, Oil increased 1%, reaching four-month highs, supported by news of another informal OPEC meeting on curbing output and a unexpected fall in U.S. crude stocks. Despite volatile trading following a price increase of 15% in seven sessions. Saudi, Iraq and Iranian energy minsters will be key OPEC representatives to meet non-OPEC member Russia on the sidelines of an energy conference next week located in Istanbul, a source from the OPEC commented.
Oil has increased more than $6 a barrel since the announced at informal discussions in Algeria on Sept. 28 that it hopes to cut output to 32.5 million-33 million bpd. That would shed about 700,000 bpd from a global surplus expected by analysts at 1.0 million-1.5 million bpd. Brent crude LCOc1 increased 54 cents, or 1 percent, at $52.40 a barrel Thursday morning gaining earlier to $52.65, its highest since June 9. It settled under $46 prior to the OPEC announcement.
U.S. West Texas Intermediate (WTI) crude CLc1 gained 48 cents to $50.31, having reported above $50 for the first time since June 24. WTI settled below $45 seven sessions ago. Earlier in the session, the market cut gains after traders cited energy monitoring service Genscape’s report of an accumulation 1 million barrels in stockpiles at the Cushing, Oklahoma delivery base for U.S. crude futures during the week to Oct 4.
“It’s really crazy these markets,” sysyrf Carsten Fritsch, commodities strategist for Commerzbank in Frankfurt. “Prices rise, regardless of the news flow and any dip is being seen as buying opportunity.”
Oil fell from above $100 a barrel in mid-2014 to around $26 in February 2016 from oversupply of up to 2 million bpd and OPEC’s denial then to limit output. But with the group changing its position, and U.S. crude stocks down by a shocking 26 million barrels the past five weeks, prices have been in an uptrend. No decision will be made at OPEC’s talks in Istanbul, but there will be discussion on steps required before the group’s policy meeting in Vienna, where output curbs will be finalized, officials reported. Algeria’s Energy Minister Nouredine Bouterfa reported the Vienna meeting could cut output by another 1 percent above the 700,000 bpd agreed in Algeria.
“We expect that Saudi will shoulder the bulk of the production cuts with a reduction of 5 percent or 0.5 million bpd, with other Gulf States cutting by 0.3 million bpd,” Bernstein Energy said in a note, adding that Iran, Libya and Nigeria were likely to get a “pass.”