Sep 17, 2014
Oil prices strengthened Tuesday after the head of the Organization of the Petroleum Exporting Countries said the oil producers' cartel could lower its production target for next year.
Brent, the global benchmark, has slid more than $15 from its high in mid-June as ample global supplies and tepid demand weighed on the market.
Brent prices have held below $100 a barrel since Sept. 9, and market participants have closely watched OPEC for indications that the group would cut production in response to the weaker prices.
OPEC Secretary-General Abdalla Salem el-Badri said he expects the group to lower its production target from 30 million barrels a day to 29.5 million barrels a day at its meeting in November, Reuters reported.
The news "probably caught a lot of people who were leaning to the downside by surprise, and so they had to change positions quite quickly," said Richard Soultanian, co-president of NUS Consulting Group. "That was very supportive of pricing today."
Brent rose $1.17, or 1.2%, to $99.05 a barrel on ICE Futures Europe.
Light, sweet crude for October delivery rose $1.96, or 2.1%, to $94.88 a barrel on the New York Mercantile Exchange.
In addition, Libya's National Oil Co. said Tuesday that production at the country's largest oil field has been cut slightly after rockets fell near the refinery it supplies.
Libyan production surged in recent months to above 800,000 barrels a day as of Monday, but production figures for Tuesday weren't available. Analysts have warned that fighting between militias could jeopardize Libya's oil output.
Traders are also waiting for news from the Federal Reserve's two-day policy-making meeting, which concludes Wednesday, and the latest U.S. oil storage data.
Prices rose further Tuesday after statements from Wall Street Journal chief economics correspondent Jon Hilsenrath suggested the Fed will continue to emphasize low interest rates. A rise in interest rates would pressure oil prices by boosting the dollar, making oil more expensive to buyers using foreign currencies.
The U.S. Energy Information Administration is set to release its storage data for the week ended Sept. 12 at 10:30 a.m. EDT on Wednesday.
Analysts expect the agency to report that crude supplies fell by 1.2 million barrels, while gasoline inventories were unchanged and stocks of distillates, including heating oil and diesel, rose by 400,000 barrels.
The American Petroleum Institute, an industry group, said late Tuesday that its own data for the same week showed a 3.3-million-barrel increase in crude stocks, a 1.2-million-barrel drawdown from gasoline supplies and a 1-million-barrel build in distillate inventories, according to industry sources.
Front-month October reformulated gasoline blendstock, or RBOB, rose 2.80 cents, or 1.1%, to $2.5588 a gallon. October diesel gained 1.67 cents, or 0.6%, to $2.7563 a gallon.
Source: The Wall Street Journal