Oil continues to rise as US stockpiles fall

Opec move to limit production this month deemed unlikely

Oil has fluctuated since August’s rally on speculation the Organisation of Petroleum Exporting Countries (Opec) and Russia will agree on ways to stabilise the market when they meet later this month. Photograph: iStock

Oil has fluctuated since August’s rally on speculation the Organisation of Petroleum Exporting Countries (Opec) and Russia will agree on ways to stabilise the market when they meet later this month. Photograph: iStock

 

Oil extended gains after weekly government data showed US inventories dropped to the lowest since February, trimming stockpiles at the highest seasonal level in at least three decades.

November futures rose as much as 1.2 per cent in New York after advancing 2.9 per cent on Wednesday.

Inventories fell by 6.2 million barrels last week, according to the Energy Information Administration. A Bloomberg survey before the report forecast a 3.25 million barrel gain.

OPEC members Saudi Arabia and Iran, whose rivalry derailed an oil supply accord earlier this year, met in Vienna a week before the organisation holds talks in Algeria.

Oil has fluctuated since August’s rally on speculation the Organisation of Petroleum Exporting Countries (Opec) and Russia will agree on ways to stabilise the market when they meet later this month.

While Venezuelan president Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg said an agreement to limit production is unlikely.

Freezing output was proposed in February but a meeting in April ended with no final accord. “The surprise decline in US crude stockpiles is supporting the market,” said Jonathan Barratt, chief investment officer at Ayers Alliance Securities in Sydney.

“I don’t see any major outcomes from the Opec meeting in Algiers. ”

West Texas Intermediate for November delivery advanced as much as 54 cents to $45.88 a barrel on the New York Mercantile Exchange and was at $45.79 at 1:29 pm in Hong Kong.

The contract rose $1.29 to close at $45.34 on Wednesday. Total volume traded was about 41 per cent below the 100-day average. Prices have averaged about $44.80 this quarter.

US Stockpiles Brent for November settlement rose as much as 53 cents, or 1.1 per cent, to $47.36 a barrel on the London-based ICE Futures Europe exchange.

Prices climbed 95 cents, or 2.1 per cent, to $46.83 on Wednesday. The global benchmark traded at a $1.47 premium to WTI.

- Bloomberg