As The Wall Street Journal reports, “A lack of an oversupply would eliminate a central truth of the oil market for the past two years, when prices collapsed because of a flood of new crude from places like the USA and Canada and ramped up production in traditional producers like Saudi Arabia and Iraq”.
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At 1600 GMT on Friday, West Texas Intermediate (WTI) crude for September delivery added 84 cents at $44.33 a barrel compared with Thursday’s closing level.
The rebound follows a drop in prices earlier this week after official USA data showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
Last week, the U.S. Commodity Futures Trading Commission (CFTC) said short positions in WTI rose to 218, 623 for the week ending on August 2, the highest amount since 2006.
In London, North Sea Brent for October delivery rose 93 cents to US$46.97 a barrel on the Intercontinental Exchange.
A number of OPEC members are struggling to cope with low oil prices.
“Since we had that drop to a record low in July, German bond yields have been pretty stable and oil prices will have a role in where we go from here”, RBC’s chief European macro strategist Peter Schaffrik said.
Baker Hughes reported that USA crude oil rigs rose by 15 this week, and now total 396.
But many traders and analysts are skeptical that Saudi Arabia would take action to limit its output, noting the country’s oil production reached record levels in July.
Growth in demand will shrink brimming crude stockpiles even as Saudi Arabia, Kuwait and the United Arab Emirates pump at all-time highs amid competition between members of the Organization of Petroleum Exporting Countries to secure market share, the International Energy Agency said.
The index rose on Thursday as energy stocks gained from a bounce in oil prices, while drugmaker Valeant Pharmaceuticals International Inc VRX.TO slumped on a report it is the target of a criminal probe.
Oil prices climbed on Thursday as investors were digesting the latest remarks from the Saudi energy minister.
“As both a consumer and a refiner of oil – the country’s refineries processed 2.5 per cent more crude oil than previous year in July – China is thus contributing to the tightening of the oil market”, Commerzbank said.
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Both contracts notched weekly gains of about 6 per cent, the biggest since late April.
