Oil rose for a second day as hedge funds increased bets on rising prices to the highest in four months. Saudi Arabia said it was confident that crude would rebound as world economic growth boosts demand.
West Texas Intermediate futures climbed as much as 2.5 percent in New York. Money managers expanded their net-long position in WTI by 14 percent in the week ended Dec. 16, U.S. Commodity Futures Trading Commission data show. A global glut that has driven prices lower was created by a lack of cooperation from producers outside the Organization of Petroleum Exporting Countries, according to Saudi Arabia Oil Minister Ali Al-Naimi. Libyan output fell to less than than the nation’s own consumption level, National Oil Corp. said.
Oil has slumped about 21 percent since OPEC decided to maintain its production target at a Nov. 27 meeting even as the U.S. pumps crude at a record pace. Producers outside the 12-member group should should cut their “irresponsible” output as excess supply harms the market, according to Suhail Al Mazrouei, the energy minister of the United Arab Emirates.
“There’s been some light buying today on the back of yesterday’s comments from the Saudi oil minister, which are helping support oil prices and equity markets,” Michael Hewson, London-based chief market analyst at CMC Markets Plc, said by e-mail. “Given the level of declines seen so far, some short covering ahead of Christmas seems sensible.”
WTI for February delivery climbed as much as $1.40 to $58.53 a barrel in electronic trading on the New York Mercantile Exchange and was at $57.68 as of 11:02 a.m. London time. The January contract expired on Dec. 19 after advancing $2.41 to $56.52. The volume of all futures traded was about 65 percent more than the 100-day average for the time of day.
Brent for February settlement gained as much as $1.59 to $62.97 a barrel on the London-based ICE Futures Europe exchange. Prices increased 3.6 percent on Dec. 19. The European benchmark crude traded at a premium of $4.47 to West Texas Intermediate. Prices have fallen 44 percent this year, set for the largest drop since 2008.
OPEC, which supplies about 40 percent of the world’s oil, will probably resist cutting output even if non-member producers offer to supply less, Al-Naimi said at a conference in Abu Dhabi yesterday. The group pumped 30.56 million barrels a day in November, exceeding its collective target of 30 million for a sixth straight month, a Bloomberg survey of companies, producers and analysts shows.
The market is oversupplied by 2 million barrels a day, said Mohammed Al Sada, Qatar’s energy minister.
“We’re now in a provisional, correctional period,” Al Sada said at the same event. “Markets have stabilization mechanisms that will bring stability. We don’t know exactly how long it will take, but it will stabilize because the current prices will separate the efficient producers from the producers who have high costs.”
Output in the U.S., the world’s biggest oil consumer, expanded to 9.14 million barrels a day through Dec. 12, according to the Energy Information Administration. That’s the highest level in weekly data that started in January 1983.
The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford and Permian in Texas and the Bakken in North Dakota. The three shale plays supplied record amounts in November, said the industry-funded American Petroleum Institute.
“In the absence of OPEC removing barrels to balance the market, we see limited support to prices near-term,” Sabine Schels, commodity strategist at Bank of America Corp., said in a report e-mailed today.
Libya’s Mellitah oil port is open, National Oil Corp. said today, after reporting clashes in the area yesterday. Libya halted exports from the Es Sider and Ras Lanuf terminals this month, the nation’s two largest facilities.