Oil prices rose on Monday to fresh highs for the month of August, with the Brent benchmark gaining 11 percent since the start of the month, as speculation intensifies about potential producer action to support prices in an oversupplied market.
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Futures slid as much as 1 percent in NY after climbing 12 percent the previous four sessions following comments from Saudi Arabia that the country is prepared to act to stabilize markets.
The price for Brent crude oil, trading now in the October contract, was relatively flat in the moments before the opening bell in NY to $49.28 per barrel.
Prices pared some gains in after market trade after data from the American Petroleum Institute showing an unexpected draw in US crude stockpiles was overshadowed by surprise hefty builds in gasoline and distillates, indicating the glut in refined oil products was growing. Since the start of August, it has risen almost 14 percent.
Globally, At around 0400 GMT, US benchmark West Texas Intermediate for delivery in September was down 25 cents, or 0.54 per cent, at Dollars 46.33 and Brent crude for October fell 35 cents, or 0.75 per cent, to USD 48.88 a barrel. The contract gained 1.8 percent to $46.58 on Tuesday, closing at the highest level since July 12.
Shares of Seadrill (SDRL) were gaining late Monday afternoon as oil prices traded higher.
Also, it follows indications from Iran that it may not take part in the OPEC talks next month, stirring speculation that the meeting will not lead to any concrete action to stabilise the market.
“While we see very little possibility of an actualization of curtailed OPEC output, there will likely be enough chatter during the next five to six weeks to deter selling in allowing WTI to gravitate at around the $45 area, at least through the second half of this month”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
On the demand side, however, there were worries which traders said were preventing prices from rising further. An OPEC production freeze plan in April was scuttled by a Saudi Arabia that was keen then to protect market share.
Some traders and investors cautioned that crude futures, which slipped into bear market territory in early August after falling 20 per cent from this year’s highs in June, were looking overbought.
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The world’s three biggest economies, the United States, China and Japan, all published downbeat economic data between Friday and Monday, casting doubt that strong growth will return soon.
