Oil prices rose on Thursday on reports that oil supply from Saudi Arabia to the market was lower in September despite the increase in the country’s production.
December delivery light, sweet crude gained 0.7% or 59 cents to $81.09 per barrel on the New York Mercantile Exchange. The prices dropped to lows of more than two years on Wednesday after the inventory data indicated an unexpected increase in supplies for US oil, as reported by The Wall Street Journal.
Brent crude gained 1% to $85.55 per barrel on the ICE Futures Europe.
Crude collapsed into bear market this month after Saudi Arabia and other producers deepened the price discounts for oil amid speculation that they are competing for Asia’s market share.
Global supplies are on the rise as the United States pumps the most oil in three decades while Russia’s output nears the post-Soviet record.
Energy Aspects Ltd analyst Richard Mallinson said, “If this was an intentional cut by Saudi Arabia, I’d expect them to have cut the actual amount of oil produced and not just the supply to the market. More is being read into the fluctuations than should be. I don’t see anything in these latest numbers to indicate a unilateral production cut.”
Gerrit Zambo, Bayerische Landersbank trader said, “The market is reacting instantly to any news on oil market fundamentals. So far these gains have been only a short-term reaction, and then the market seems to go back to its bearish sentiment.”’
Saudi Arabia’s output for September was 9.7 million barrels per day, up from around 9.6 million barrels per day in August, as reported by a person familiar with the Saudi policy.
Libya, Angola and Venezuela have mentioned that OPEC should take action on prices with Venezuela’s President Nicolas Maduro calling for an emergency meeting in a televised address on October 17.
Global markets are oversupplied by around 1 million barrels per day and OPEC needs to lower the collective output by around 500,000 barrels per day, as Samir Kamal, OPEC governor of Libya said yesterday citing personal views.
To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of the story: Jonathan Millet at email@example.com