Oil rebounds from six-week low on OPEC speculation; Oversupply Overweighs Freeze Output

تم نشره في Tue 20 September / Sep 2016. 12:00 AM
  • An oil pump is seen in Lake Maracaibo, in Cabimas, Venezuela, August 13, 2016. - (REUTERS)

NEW YORK/LONDON — Oil prices recovered on Tuesday from six-week lows, with US crude rising as much as 1 per cent, as the market weighed up OPEC comments that a possible production freeze agreement could last longer than expected.

Brent crude futures LCOc1 were down 10 cents at USD45.85 per barrel, Tuesday. Earlier in the session, they fell to USD45.09, the lowest since Aug. 11.

US West Texas Intermediate crude futures CLc1 rose 45 cents, or 1 per cent, to USD43.75. WTI's session bottom of USD42.55 was also the lowest in nearly six weeks.

The pending expiry after Tuesday's settlement of WTI's October CLV6 delivery contract, the front-month for the US crude benchmark, had also weighed in New York's morning trade.

Oil prices initially fell on pessimism that the Organization of the Petroleum Exporting Countries (OPEC) and other major crude producers will reach an output freeze deal at Sept. 26-28 informal talks in Algeria. Saudi Arabia, Iran, Iraq, Nigeria and Libya, five of OPEC's largest oil exporters, have all raised or been trying to hike output in recent months even while talking of a freeze.

But as noon approached, short-covering and fresh buying emerged from those fearing of a rally should OPEC announce a deal in Algeria.

OPEC Secretary-General Mohammed Barkindo said he expected the potential freeze deal between OPEC and other producers to freeze output to last one year, longer than previously thought.

Worries that US oil stockpiles may have risen last week, however, limited gains in crude futures.

US crude stockpiles likely rose 2.3 million barrels last week, analysts forecast in a Reuters poll. The American Petroleum Institute (API), a trade group, will release its weekly crude inventory report at 4:30 p.m. EDT (2030 GMT), before official stockpiles data on Wednesday from the US Energy Information Administration (EIA).