Oil continues to rise

The market pared early sharp gains after the EIA reported that US crude stocks rose more than expected.

West Texas Intermediate for November delivery was at $46.36 a barrel on the New York Mercantile Exchange, up 10 cents, at 1:29 p.m. Singapore time.

Brent crude that is a global benchmark went back to above fifty dollars a barrel, breaking the range of the trades since the start of September.

Crude futures see-sawed on a volatile day of trading, amid a stronger than expected build in USA crude stockpiles last week. I am predicting that oil production will fall more than 1 million barrels per day from the peak before the end of the year.

Commercial crude inventories jumped by 3.1 million barrels, more than the market estimate of 2.25 million barrels.

A rally between Friday and Tuesday had bumped up Brent and US crude by about $4 each, as oil broke out of a month-long trading range on technical buying and supportive data.

Oil settled at its highest price in five weeks. US light crude rose $1.18 to high of $49.71.

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. This, coupled with the supply worries, led to investors viewing the market fundamentals remaining weak, which in turn kept the prices depressed.

Oil supplies from nations outside OPEC are set to fall by half a million barrels a day next year, Fatih Birol, executive director of the Paris-based global Energy Agency, said at the same conference.

The U.S. Energy Information Administration, which reports official storage data on Wednesday, said last week that inventories were up about 4 million barrels in the week to September 25.

Oil prices have nearly halved in the previous year on oversupply in a drop that deepened after OPEC in 2014 changed strategy to protect market share against higher-cost producers, rather than cut output to prop up prices as it had done in the past.

Meanwhile, Royal Dutch Shell boss Ben van Beurden has warned of a possible future oil price spike if the Organisation of the Petroleum Exporting Countries continues their policy of maintaining production levels even though low prices has caused global investment in the industry to tumble.