Oil held gains near $51 a barrel as OPEC Secretary-General Mohammad Barkindo reiterated a rapid market re-balancing is underway, while predicting robust crude demand next year.
Futures gained 0.3 percent in New York after advancing 3.3 percent in the previous two sessions. While the global economic recovery has gained traction, the current cycle of low prices is unprecedented, Barkindo said on Tuesday. Saudi Arabia’s output next month will drop to the lowest since January 2015, according to production plans published Monday by the energy ministry.
Oil has inched higher this week after the biggest weekly loss since May amid speculation rising global output may offset supply curbs led by members of the Organization of Petroleum Exporting Countries. U.S. crude stockpiles probably fell by 2.4 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Thursday.
“Re-balancing is on track globally,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney. “Continuing OPEC cuts will keep prices elevated. There is still room for oil to move higher,” he said, forecasting the top of the range at about $55 a barrel.
West Texas Intermediate for November delivery was at $51.05 a barrel on the New York Mercantile Exchange, up 13 cents, at 1:22 p.m. in Hong Kong. Total volume traded was about 40 percent below the 100-day average. Prices rose $1.34 to $50.92 on Tuesday, the biggest gain in two weeks.
Brent for December settlement rose 7 cents to $56.68 on the London-based ICE Futures Europe exchange. The contract on Tuesday increased 82 cents, or 1.5 percent, to $56.61 a barrel. The global benchmark crude traded at a premium of $5.33 to December WTI.
State-run Saudi Aramco will pump about 9.77 million barrels a day next month, according to the production plans. Output from Saudi Arabia last dropped below 10 million barrels a day in May, according to data compiled by Bloomberg.
- Pierre Andurand’s hedge fund trailed the oil price rally last month, posting a 2.4 percent gain, compared with the nearly 10 percent boost for Brent crude, according to people familiar with the performance.
- Producers should not extend supply cuts beyond their expiry at the end of March if prices rise to $60 a barrel, according to Vagit Alekperov, the chief executive officer of Russia’s Lukoil PJSC.