Oil entered a bull market August 18, less than three weeks after tumbling into a bear market, as prices surged partly on speculation that talks next month among members of the Organization of Petroleum Exporting Countries may result in action to stabilize the market. The price for Brent crude oil, the global benchmark, was down 1.2 percent to $48.12 per barrel in NY. Iraq would support a proposal for OPEC and other major oil producers to freeze output at talks in Algeria next month, Prime Minister Haidar Al-Abadi said in Baghdad.
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Traders and analysts surveyed by The Wall Street Journal expect the EIA to report that crude stockpiles rose by 1.2 million barrels in the week ended August 26, while supplies of gasoline also fell.
Oil entered a bull market August 18, less than three weeks after tumbling into a bear market.
Saudi Arabian energy minister, Khalid Al-Falih, told Reuters last week he did not believe an intervention in the oil market was necessary since the “market is moving in the right direction”. Much of that gain resulted from talk about a potential freeze on production from OPEC members and, perhaps, Russia. “So this speculation will vanish into thin air, soon – and prices will come down again”, said Frank Schallenberger, head of commodities research at Stuttgart-based Landesbank Baden-Wuerttemberg. “OPEC is close to capacity”.
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On the New York Mercantile Exchange, light, sweet crude futures for delivery in October fell to $46.20 a barrel in the Globex electronic session, the lowest intraday level since Aug 12.
At 2:58pm BST, the Brent front-month futures contract was up 0.57% or 28 cents to $49.54 per barrel, while the West Texas Intermediate was 0.81% or 38 cents higher at $47.36 per barrel as investors reduced short positions, i.e. bets that the oil price would fall. Total volume traded was about 32 per cent below the 100-day average. USA commercial crude inventories increased by 2.3 million barrels last week, maintaining a total US commercial crude inventory of 525.9 million barrels.
Moreover, Shell’s Chief, Energy Adviser, Wim Thomas, has said that the huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017.
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“Either way, despite some increases in Saudi Arabia and Iraq, OPEC production seems to be flattening with the outages in Libya, Nigeria and Venezuela, knocking out some 3 million barrels of daily production and no one is holding their breath they’ll return soon”, said Nunan.
