Crude oil prices and related exchange traded funds climbed Thursday after the Saudi oil minister hinted at possible action in light of another dip in prices and the International Energy Agency forecasted supply to fall behind demand.
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The comment by Saudi’s energy minister Kahlid al-Falih boosted oil prices by more than 4% overnight, propelling both USA and Brent, the Global benchmark, to a three-week high.
OPEC’s informal meeting will take place on the sidelines of the International Energy Forum in Algeria from September 26 to 28, ahead of a planned meeting due at the end of November.
The remarks helped send prices up more than 4 percent in NY, where a barrel of West Texas Intermediate for September delivery closed up $1.78 at $43.49, after having lost more than a dollar the day before.
Oil prices fell sharply on Wednesday after data from the U.S. Energy Information Administration EIA/S showed crude inventories rose 1.1 million barrels in the week ended August 5.
AB Bernstein said global oil production rose nearly 0.8 million barrels per day (bpd) in July from the previous month, to 97.01 million bpd, while commercial inventories increased by 5.7 million barrels to 3.09 billion barrels in June.
An “inventory overhang” in Organisation for Economic Co-operation and Development (OECD) countries continued to shift from crude into products, with commercial stock reaching a record 3.093 billion barrels, the report said. OPEC produces just under 35% of crude oil globally.
Last week, crude oil inventories were up 1.4 million barrels, according to the EIA. “From a technical standpoint WTI Crude is bearish, a breakdown below $41 could encourage a further decline towards $40”.
Oil prices fell for a third day in Asia trade on Thursday after figures showing high U.S. crude stockpiles and increased Saudi production.
Many analysts say they see oil prices trading within a range for the next few weeks.
“Today’s IEA report paints a more downbeat picture for oil demand heading into year-end than it did in its July update”, said Michael Hewson, chief market analyst at CMC Markets UK.
Brent crude oil prices, representing the global benchmark, rose 1.5% to $45.52.
In its previous report in July, OPEC said it expected the oil market balancing later this year, leaving its forecasts largely unchanged.
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On the demand side, the IEA said it expected a slowdown from 1.4 million barrels per day in 2016 to 1.2 million bpd in 2017.
