Crude Oil Advances to Two-Week High as OPEC Plans Informal TalksBy
Market on path to rebalancing, Qatar energy minister says
OPEC members will meet at Sept. industry conference in Algiers
Oil rose to a two-week high after OPEC’s president said the group will hold informal talks in Algiers next month and predicted the current bear market would be short lived.
Futures increased 2.9 percent in New York. Members of the Organization of Petroleum Exporting Countries are in “constant deliberations” on stabilizing the market and crude prices are expected to rise in the latter part of 2016, according to a statement on OPEC’s website attributed to Mohammed bin Saleh Al-Sada, Qatar’s energy and industry minister and the group’s current president.
"This is a very formal announcement to an informal meeting and that has bullish implications," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. "The statement said OPEC expects the market to be balanced before long, and that the group believes the drop in prices is temporary."
Oil is fluctuating after tumbling more than 20 percent into a bear market last week. U.S. drilling is expanding as crude supplies continue to rise, keeping stockpiles more than 100 million barrels above the five-year average. OPEC members always intended to discuss the market when they gather for the International Energy Forum next month, but there are no plans to renew the failed push for an output freeze, according to two delegates from the group.
West Texas Intermediate for September delivery increased $1.22 to settle at $43.02 a barrel on the New York Mercantile Exchange. It was the highest close since July 25. Total volume traded was 13 percent above the 100-day average at 2:44 p.m.
Brent for October settlement advanced $1.12, or 2.5 percent, to $45.39 a barrel on the London-based ICE Futures Europe exchange. It’s the highest close since July 22. The global benchmark ended the session at a $1.63 premium to WTI for October delivery.
Commodities also climbed on rising optimism that the U.S. economy and central-bank stimulus will power global growth. American shares fluctuated near all-time highs.
Russia doesn’t see a need to re-engage in freeze talks, Energy Minister Alexander Novak said Monday. Russia’s talks earlier this year with OPEC members about capping production contributed to the rebound in prices from a 12-year low, although the deal ultimately failed in April after Saudi Arabia refused to back the accord because Iran wouldn’t join.
"The mere mention of the word freeze has people thinking that the market has gone low enough for the time being," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "People were looking for a reason to buy into the market."
U.S. drillers added seven rigs during the week ended Aug. 5, Baker Hughes Inc. said Friday. The count is the highest since March and has climbed for six weeks, the longest stretch in a year.
American crude stockpiles increased for a second week to 522.5 million barrels through July 29, keeping supplies close to April’s record of 543 million. The Energy Information Administration will probably report crude inventories slipped 1.5 million barrels last week, according to analysts surveyed by Bloomberg.
- Money managers increased wagers on declining WTI prices to a record 218,623 contracts amid rising U.S. crude inventories. Short positions on Brent crude rose to 125,431 lots, the highest since January.
- Libya has started maintenance work at Es Sider, the nation’s largest oil export terminal, as part of plans to increase output.
- Morgan Stanley sees the possibility of $35 a barrel for oil prices in the next one to three months, as well as a deeper contango.
- China’s crude imports fell to the lowest level in six months as demand from independent refineries eased. Net fuel exports surged to a record.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Deutsche Bank's Bad News Just Gets Worse With $35 Billion Flub
- The U.K. Just Went 55 Hours Without Using Coal for the First Time in History
- Why a Cashmere Sweater Can Cost $2,000 … or $30
- Oil Declines After Trump Blasts OPEC for Inflating Prices
- Wells Fargo Fined $1 Billion Over Consumer-Business Missteps