Crude oil gained for the first time in four days as the dollar weakened and OPEC warned that prices may surge without new investment in production.
The Bloomberg Dollar Spot Index declined from the highest level on record, boosting oil’s investment appeal. Saudi Arabia’s oil minister met with Russian and Norway officials to discuss market stability, according to the official Saudi Press Agency. OPEC Secretary-General Abdalla El-Badri said Monday that oil may jump to $200 a barrel without adequate long-term investment.
“The dollar is definitely a factor that seems to be giving the market some support,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, said by phone. “The Saudis are going back to some non-OPEC producers. That may be a sign that they are willing to stabilize the prices.”
Oil slumped almost 50 percent last year as the U.S. pumped crude at the fastest rate in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to reduce output. Prices may drop to $30 a barrel, Gary Cohn, the president of Goldman Sachs Group Inc., said in an interview with CNBC on Monday.
West Texas Intermediate for March delivery rose $1.08, or 2.4 percent, to end at $46.23 a barrel on the New York Mercantile Exchange. The contract fell to $45.15 on Monday, the lowest close since March 2009. The volume of all futures traded was 17 percent below the 100-day average for the time of day.
Brent for March settlement climbed $1.44 to $49.60 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude ended at a premium of $3.37 to WTI on the ICE.
The Bloomberg Dollar Spot Index, a gauge of the currency’s performance against 10 major peers, dropped 0.6 percent.
Saudi Oil Minister Ali Al-Naimi is meeting with Rolf Willy Hansen, ambassador of Norway, Oleg Ozerov, ambassador of Russia and Pekka Voutilainen, ambassador of Finland, according to the SPA.
“It looks like the low prices are starting to worry them,” said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan.
OPEC, which supplies about 40 percent of the world’s oil, is open to a meeting with non-member producers to tackle the global glut, El-Badri said in an interview in London, estimating the surplus at 1.5 million barrels a day.
He didn’t offer a date for when oil could reach $200 a barrel and said the market would be brought back into balance by a reduction in supply, rather than an increase in demand.
Saudi Arabia won’t balance global crude markets on its own even as prices fall to levels that are “too low for everybody” and threaten investment needed to meet long-term demand, the head of Saudi Arabian Oil Co. said.
“Supply and demand and the rules of economics will govern. It will take time for the current glut to be removed,” Chief Executive Officer Khalid Al-Falih said at a conference in Riyadh. “Saudi Arabia will not singlehandedly balance the market in a downturn,” he said, reiterating government policy.
U.S. crude stockpiles probably climbed 3.85 million barrels in the week ended Jan. 23, according to a Bloomberg News survey shows before a government report on Wednesday. At 401.7 million barrels, it would be the highest in records dating back to August 1982.
Crude inventories climbed 12.7 million barrels last week, the American Petroleum Institute said, according to reports on Twitter.
“The market is trying to stabilize but the oil inventory data that will come out tomorrow will negate all that,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “Any rally will be short-lived. I won’t be surprised to see prices in the 30s in a few weeks.”
The nation’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota. Production averaged 9.19 million barrels a day through Jan. 9, the most in weekly records compiled since January 1983, data from the Energy Department’s statistical arm show.
Retail regular gasoline averaged $2.038 a gallon Monday, gaining for the first time since September, according to AAA.