US West Texas Intermediate (WTI) crude futures were at $43.98 a barrel, up 49 cents, or 1.1 per cent, and touching their highest since July 25 at $44.17.
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On Thursday, crude surged almost 5 per cent after Saudi Arabia’s energy minister said oil producers would discuss potential action to stabilize oil prices during a meeting next month in Algeria.
A build in stockpiles, spurred in part by higher production levels and a weak growth in the global economy, helped push crude oil prices well below the $100 per barrel mark common in 2014.
News of the unscheduled gathering, ahead of OPEC’s next regular production meet in Vienna on November 30, sparked speculation of fresh measures to stabilize the market – and sent prices soaring on Monday.
The report comes a day after the US Energy Information Administration said weekly US crude inventories rose 1.1m barrels last week to 523.6m barrels, compared to expectations for a 1.75m-barrel fall.
“Our balances show essentially no oversupply during the second half of the year”, it said.
Saudi Arabia ramped up to a record rate of 10.62 million barrels a day, while Iraqi crude production rose by 80,000 to 4.33 million barrels a day. “Yet oil prices were able to march on regardless”.
According to al-Falih, it will take some time for the market to recover, but the current situation is unsustainable and prices need to go up to reverse the current decline in investment and output.
Oil prices entered a “bear” market last week, having fallen more than 20 per cent from peak levels above Dollars 50 a barrel seen in early June, and closing below USD 40 for the first time since April. The chart below shows the current status of US crude oil inventories.
Bearish oil bets likely reflect traders’ belief that the supply glut will continue weighing on the market, despite chatter from some oil-rich nations about setting new limits on production to pump up prices.
The forecast for 2017 – although still above trend – was cut by 0.1 million bpd from last month´s report following a revision to the global economic outlook by the International Monetary Fund after Britain voted in June to leave the European Union.
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The Paris-based agency, whose monthly oil market report is closely watched by the industry, said it predicts global production of crude oil will fall behind demand by nearly one million barrels a day from July through September.
