USA crude futures were $48.23 a barrel, a cent lower.Europe and Asia’s largest markets, Germany and China, were both shut for public holidays on Monday, limiting trade. The 170,000-barrel increase from the previous month was driven by the return of production from Libya and Nigeria. Therefore, oil prices are set to rise above the $50/bbl and continue its upward movement this week.
Both Brent and US crude on Tuesday added slightly to a rally since last week on bets that OPEC and non-OPEC oil producers could reach an agreement on limiting production.
The price of Brent crude, the global oil benchmark, has surpassed the 50 dollars-a-barrel mark.
Oil prices had been supported “following OPEC’s preliminary agreement to cut production”, ANZ bank said on Monday.
Oil prices ended Tuesday’s official session lower before rising post-settlement on the API report.
While few critics think the OPEC cut will do anything to reduce the global glut and instead will merely cause USA companies to put more drills into action (thus provoking a retaliatory response from OPEC), they concede it was smart strategy on the cartel’s part.
OPEC agreed in Algeria, in September, to cap production at not more than 33 million barrels per day.
USA shale producers were hedging future oil output at their highest levels this year, analysts at Morgan Stanley noted on Monday.
The OPEC talks have put a cushion under oil prices.
Similar deals have been attempted in the past, but quickly dissolved amid squabbles between OPEC members.
Iran had been the stumbling block for prior output agreement at a meeting in Doha in April, as Tehran has been vocal in the past about not agreeing to a freeze until its production rises to presanction levels. Sustained optimism over the OPEC deal, the details of which will not likely be known until the next OPEC meeting in November, will depend largely on whether major non-OPEC producers would be willing to participate or not.
NEW YORK, Oct 4 (Reuters) – Oil prices were slightly higher in choppy trade on Tuesday, with Brent hitting four-month highs on a rally inspired by OPEC plans to tighten output before a surging dollar pared gains.
The six secondary sources now used by OPEC are: oil-pricing agencies Platts and Argus, The Paris-based International Energy Agency (IEA), the U.S. Energy Information Administration (EIA), consultancy Cambridge Energy Research Associates (CERA) and industry newsletter Petroleum Intelligence Weekly (PIW).