It noted that robust Middle East production lifted total OPEC crude supply 680 kbpd above a year ago and held output at an eight-year high.
Advertisement
The West Texas Intermediate (WTI) benchmark for United States crude futures has experienced similar gains over the past four days.
Yet prices remain 20% higher than in early August and hit nearly $50 a barrel the previous day, supported by a potential freeze or even cut in output following a meeting between oil cartel Opec and other major producers like Russian Federation, scheduled for September.
“The decline in crude inventories and the much bigger drop in gasoline stockpiles is clearly a positive”, said Angus Nicholson, a market analyst in Melbourne at IG Ltd.
“If we’ve learned anything about the oil market, it is that sentiment is extremely fragile”, said Michael Tran, director of energy strategy at RBC Capital Markets in NY.
But the market’s upside was capped by a Reuters report that said Saudi Arabia could boost crude output in August to new records at 10.8-10.9 million bpd, overtaking Russia’s production, even as OPEC aims for a pact to curb global output.
The report comes ahead of a meeting in September between OPEC and non-OPEC members to address ways to stabilise the market.
Oil prices recovered slightly from earlier losses on Wednesday after data showed a decline in weekly USA crude inventories.
The opening of the arbitrage between the United States and Europe could help to draw down USA crude inventories further.
“The latest news from Saudi Arabia is not price supportive at all”, Carsten Fritsch, senior oil and commodities analyst at Germany’s Commerzbank, said, “This is a double whammy for the oil market”.
U.S. West Texas Intermediate crude was trading at $45.76 a barrel, up 2 cents from its previous close, and still over 16 percent above its $39.19 monthly low from August 3.
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.
OPEC producers will meet in Algeria in September as the global oversupply continues to hit the budgets of most exporters.
“Iran, which has returned as a major producer after years of sanctions, scuttled that meeting and is unlikely to be agreeable to any cuts in production”, he said in a note.
Advertisement
Saudi Arabia has been raising output since 2014 to drive higher cost producers out of the market.
