Oil Up 4% as Production Slows

WTI closed up $2.27, or 4.9 percent, at $48.53 a barrel. Its session peak, a penny shy of $52, was the highest since September 3, and took three-day gains to more than 7 percent.

The world has been awash in crude since Organisation of Petroleum Exporting Countries (Opec) decided last November not to reduce output, focusing instead on protecting its market share from rising shale supplies.

News of a potential cooperation between OPEC and Non-OPEC oil producers also helped lift crude oil prices.

Another supportive factor is the weakening greenback, which drives demand by making oil cheaper for buyers who are using other currencies. Last week, there was a surprisingly sharp decline in these numbers to 26 rigs.

Oil prices traded in a narrow range in September as investors assessed how long the global glut of crude oil-which sent prices plunging in the past year-would persist. A few analysts predicted the data would show further builds in crude stocks, putting oil prices under renewed pressure.

Stockpiles rose by 3.1 million barrels, more than the market estimate of 2.25 million barrels.

In addition, he told reporters that a meeting between officials from Russian Federation and Saudi Arabia was being planned for the end of the month to discuss energy issues and other projects. With more job cuts coming in the energy sector, oil should benefit from lower USA output as well as a more accommodative interest rate environment as the Fed has one hand tied behind its back.

The Secretary-General of OPEC, Abdullah al-Badri, said oil supply growth from non-OPEC producers might be zero or negative in 2016 because of lower upstream investment. It was driven by the data that came out from the US Energy Information Administration (EIA) yesterday about lower USA production but the data is already expected. Yoo-jin Kang, commodities analyst at NH Investment & Securities in Seoul, said the global oil market was oversupplied and any talk of production restraint was supportive.

Global oil market remains “well-supplied” and will continue to be so in the next year, says Azlin Ahmad, Editor, Crude Oil at Argus Media, adding, she still sees OPEC productions at high levels. “This will mean less supply in the near future”.

The nation would pump 4 million barrels a day within a year of the removal of sanctions, said Mehdi Hosseini, the chairman of Iran’s oil contracts restructuring committee.