The rally has also been driven by short covering, as speculators including hedge funds and other money managers have amassed record short positions.
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Technically, oil had been in a bear market early this month, but the rally turned it into a bull market by mid August.
In the 12 months to June, Venezuela’s crude output fell 9 percent to 2.36 million barrels per day (bpd), and internal trade and supply data seen by Reuters show that state-controlled oil firm PDVSA’s crude exports, which account for 94 percent of the country’s hard currency income, fell to 1.19 million bpd in July, excluding independent sales made by its joint ventures.
Technically, prices have entered a bull market as they have gained more than 20 percent since lows of below $40 earlier this month, fuelled mainly by official data showing lower USA stockpiles and hints of a possible production freeze at the Organization of Petroleum Exporting Countries (OPEC).
USA futures for September delivery recently fell 20 cents, or 0.4%, to $48.02 a barrel on the New York Mercantile Exchange.
Oil and metals prices were both higher, with Brent crude oil trading up 0.1% at $49.92 a barrel and copper up 0.9% at $4,820 a ton.
“We would argue that improved fundamentals are not a key reason for the recent price bounce”, Morgan Stanley said in a note.
Russia, which pumps 10.85 million barrels a day of crude oil, and Saudi Arabia, which pumps 10.67 million daily, are the world’s largest producers.
Brent crude was down 27 cents, or 0.5%, at $50.60 per barrel by 3pm GMT. The session peak was $51.22, the highest since June 22.
A downturn in oil prices recently has prompted Russian Federation and Saudi Arabia to start talking again about freezing output to try to stabilize prices.
In Libya, the National Oil Corporation began to load a tanker with crude at the country’s eastern Zueitina port, which has been shut since November.
A stronger dollar also weighed on prices as it rose 0.34 percent against a basket of currencies.
Attention of the market is mainly focused on the forthcoming informal meeting of OPEC members in Algeria, which is scheduled for September 26-28. Some in the market have speculated that a production sharing deal might be in the works.
Saudi Arabia has helped stoke that perception, after scuttling a similar plan in April.
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“Clearly oil prices have been too low for too long, from an OPEC perspective”, Krane told Trend by email.
